From the New York Times, December 8:
The 15-year effort by Japan is a model for countries now scrambling to reduce their dependence on Beijing’s critical metals.
Sojitz, a Japanese conglomerate, turned to Lynas, an Australian mining company, to build a rare-earth supply chain outside China. Lynas mines in Australia and refines in Malaysia.
The world reacted with alarm this year when Beijing introduced waves of export controls on rare earths, the minerals vital to the manufacturing of everything from cars to advanced electronics. For Japan, the experience felt like déjà vu.
China maintains a near monopoly on the supply of the metals. Japan learned that the hard way in 2010 when China effectively cut it off during a territorial dispute between the countries. Tokyo has since quietly stitched together a supply chain that is considerably less dependent on China. For Japan, that is an important hedge to political risk, as a recent flare-up in tensions between the nations underscores.
As the United States and other nations scramble to secure rare earths outside China and build up their domestic supplies, Japan’s experience provides lessons in how it can be done, according to interviews with current and former government officials, business executives and industry experts in Japan.
“The urgency of the rare-earths situation is just now dawning on the United States and Europe,” said Naoki Kobayashi, an official working in the minerals division of Japan’s trade ministry. “For Japan, this painful lesson came 15 years ago,” he said.
Supply ShockPresident Trump has said he believes it will take the United States about a year to secure ample rare-earth supplies. But Japan is a case study in how hard it is to pull out of China’s grip — especially its extremely cost competitive rare-earth processing facilities. Experts say such an effort requires both sustained government support and international collaboration.
In September 2010, a collision near disputed islands between a Chinese fishing trawler and two Japanese Coast Guard vessels escalated into a diplomatic and economic crisis. Japan detained the captain of the Chinese ship, and Beijing, in retaliation, implemented an unannounced, two-month embargo on rare-earth exports.At first, the significance of China’s move was lost on some Japanese officials.
Tatsuya Terazawa was in charge of economic policy at Japan’s trade ministry in 2010. He recalled that the ministry’s lead auto industry official rushed to his desk, warning that the entire automotive supply chain could be suspended because of the sudden cutoff.
“I had to confess, I had zero knowledge about rare earths,” Mr. Terazawa said. He said his colleague explained that these materials were essential ingredients for the magnets used in motors across Japan’s auto sector. And Japan, like most industrialized nations, had ceded control of this vital supply almost entirely to China.
Mr. Terazawa was responsible for developing the trade ministry’s next suite of economic policies. He compiled a package, worth a little over $1 billion at the time, aimed at reducing Japan’s supply chain vulnerability to rare earths. It included substantial support for Japanese groups to diversify rare-earth sources.
“At the time, I was criticized that I was demanding much more money than necessary,” Mr. Terazawa said. “But I was determined that Japan never repeat this incident.”
Finding Lynas
The timing was, in some ways, opportune. Sojitz, a Japanese conglomerate, and Jogmec, the government body overseeing mineral resource security, were seeking non-Chinese rare-earth options. And Lynas, an Australian mining company, was dealing with financial difficulties.Lynas was trying to create the world’s first integrated rare-earths supply chain without using China, instead mining the ores in Australia and refining them in Malaysia. But it was struggling to amass the capital it needed to increase production at its Malaysian refining site.
Sojitz had to find sources of rare earths outside China. Without stable supplies, “factories in many places would have to stop operating,” said Kosuke Uemura, the chief executive of Sojitz. At the time, “Lynas was the only option,” he said.
In 2011, Jogmec and Sojitz did a deal that provided $250 million in loans and equity to Lynas. The transaction secured for Japan a long-term supply of rare earths sourced outside China.
Today, in Western Australia, workers on the remote Mount Weld volcanic plug are flown out from Perth on rotations to extract rare-earth ore from an open-pit mine owned by Lynas
The partially purified concentrate is then shipped 5,000 miles to the company’s facility in Kuantan, Malaysia — until this year, the only large-scale rare-earth separation plant operating outside China. There, the materials are refined through a chemical process into individual rare-earth oxides pure enough to use in manufacturing.
From Malaysia, the metals are transported another 3,000 miles to Japan, where Sojitz manages distribution to domestic magnet makers. In Japan, the magnets are used in a number of products, including vehicles produced by automakers like Toyota.
Early Challenges
Japan has significantly bolstered its supply chain resilience. While industry estimates placed Japanese rare-earth imports from China at 90 percent or more during the 2010 trade dispute, that figure now stands closer to 60 percent to 70 percent.Sojitz received its first large shipments of rare earths from the Malaysia facility in 2012 and has continued to expand the breadth of metals it imports. In October, it added a type of specialized, heat-resistant magnet ingredients to its portfolio.
According to Mr. Uemura, the Sojitz chief executive, the toughest bottleneck was the refining process in Malaysia. The chemical separation of rare earths produces large volumes of acidic waste and thousands of tons of low-level radioactive residue. Proper management and disposal of the waste is expensive and time consuming.
Between 2011 and 2012, the Lynas facility in Malaysia faced months of delays because of fierce local opposition and legal challenges. The facility began operating only after it revised its residue management plan multiple times.
In contrast, Chinese processing factories are often lightly regulated, and some illegally operated, creating toxic waste sites.
As a result, Mr. Uemura said, Sojitz and Lynas have higher costs than Chinese rivals and require public backing. “If we were to compete normally with China, we’d be playing on a different field altogether,” he said. “This gap is absolutely unbridgeable.”
Export Controls
This year, China introduced expansive rare-earth export controls, first in April and again in October, restricting the materials themselves and the processing technology. Beijing’s measures targeted all exports, not just those bound for Japan....
....MUCH MORE
Some of our posts along the way:
May 2021 - "Japan’s global rare earths quest holds lessons for the US and Europe"
Stocks trade generally mournful and reflective.Sept. 2011
In early premartket, Molycorp is down, $1.54 (2.57%) at $58.30, Rare Element is down 2.65% at $10.64 and Avalon is down 2.92%
Auspicious update, below....
Predictions: Rare Earth Demand 2015-2020 (MCP; REE; AVL)
July 2021
Japan's Responses In the Event Of A Chinese Attack On Taiwan
You can see Japan's quandary if you follow the islands down to Okinawa and beyond....
January 2023
"Japan dives into rare earth mining under the sea"
It's taken them long enough.*
Here's an interesting map from the article, as we've said over the years, Japan has a real interest in who controls Taiwan:
And the reason I said Europe risks becoming a satrapy of China?
Absolutely brutal… 🇺🇸🇪🇺
— Geiger Capital (@Geiger_Capital) December 9, 2025
The EU Commissioner of Industry:
"Last month, I was supposed to go to Brazil to discuss a rare earth mine. 3 days before, we were told that the Americans had already come, put money on the table, and bought all production until 2030." pic.twitter.com/rYLfLJcD0s
The satrapy bit was the outro from December 8's "JPMorgan CEO Jamie Dimon says Europe has a ‘real problem’".
