Indian Council of World Affairs

Nations today are extensively driven by technology. The growing use and strategic importance of rare-earth elements have made them key instruments of geoeconomic influence across a wide range of sectors, from automobiles to artillery. Rare-earths are essential minerals needed for the production of heavy machinery^[i]. They are widely used in manufacturing military equipment, automobile parts (magnets), semiconductors, mobile phones, and air conditioners, the absence of which could hinder industrial production and lead to snail-paced technological advancement^[ii].

The distribution of these elements vary across continents and are highly dependent on national reporting practices. According to recent reports, China holds almost half of the world's rare-earth reserves at 44 Mt REO (million metric tonnes of rare earth oxide), or 48.9%, followed by Brazil and India at 23.3% and 8.0%, respectively^[iii]. China accounts for about 60% of global mine production and 90% of refined and rare-earth magnet production^[iv]. Such concentrations have heightened the strategic importance of these elements, given their wide range of applications and the potential of supply disruptions to affect global supply chains. China attempts to impose controls on its rare earth exports on grounds of national and economic security, which has therefore posed risk to many manufacturing sectors worldwide, with Japan emerging as one of the affected countries.

Controlled Exports and Japan's Dilemma

In March 2026, Japanese Prime Minister Sanae Takaichi made remarks supporting Taiwan amid rising Chinese hostility. Given that Taiwan remains an absolute red line for China, Beijing responded with strong retaliatory measures, including sending warships, suspending tourism, reclaiming its pandas, and imposing stringent restrictions on rare-earth exports to Japan on the grounds of their potential “dual-use” applications^[v]. Japan is thus facing severe supply chain challenges as it boosts defence funding, challenging regional security.

Japan’s heavy reliance on rare-earth elements is driven by its most successful industries, including automotive magnets, air conditioners, and television systems. This vulnerability was was last starkly exposed on September 7th, 2010, when a Chinese fishing boat collided with two Japanese Patrol vessels off Senaku, leading to the arrest of the Chinese captain^[vi]. In response China restricted rare-earth exports to Japan. This pressure forced Japan to reduce its dependence from 90% to 60% on China, despite soaring prices^[vii]. Following the recent supply restrictions, Japan is handling the situation with greater maturity and preparedness. It now attempts to become self-reliant in this sector by investing in technology to extract resources from its own seabed, which has remained untouched for a long time.

Supply Chain Reconfiguration

To secure its resource independence the Japanese government unveiled in 2010 a comprehensive package to rebuild its rare-earth minerals supply chain, with an estimated budget of almost $1.2 billion to counter China's bans^[viii]. These included the development of technology and substitute materials, recycling of rare earths, acquisition of foreign mining interests, for example, in Australia and India, and the stockpiling of materials to build strategic mineral reserves. Japan, through its Economic Security Promotion Act, is trying to stabalize its economy by ensuring stable supplies, developing critical technologies, building essential infrastructure, and protecting sensitive patents through non-disclosure mechanisms to restructure its supply chain and ensure it has sufficient resources. The act came into effect on May 11, 2022. It aimed to secure supply chains against disruption from geopolitical conflict by indigenising them or relying on allies and partners rather than on China^[ix]. This issue was also presented to the G7, where the finance ministers of each member state urged the adoption of bilateral and multilateral agreements to secure rare-earth metals, largely from Australia, their natural partner.^[x].

To diversify its supply chain, and reduce reliance on single sources, Japan is implementing the strategy of "managed interdependence”. As a part of this effort the Japan Oil, Gas and Metals National Corporation (JOGMEC) has collaborated with Lynas Corporation of Australia, which has provided stable access to Japan's indispensable minerals—dysprosium and terbium^[xi]. Simultaneously, it is also trying to expand and industrialise its recycling sector, i.e., by utilising passé (used) materials as valuable resources. For instance, Daikin Industries, in collaboration with three other firms, launched an initiative on April 14th, 2026, since none existed before, to collect and recycle commercial air conditioners and make new rare-earth magnets with aid from Shin-Etsu Chemical^[xii].

Japan has moved towards developing and using native technology for the extraction of rare earth resources to brace itself against similar situations in the future. The Japan Agency for Marine-Earth Science and Technology (JAMSTEC), a leading Japanese research institution focused on ocean science and technology, initiated the development of deep-sea technology for resource extraction. Chikyū (ちきゅう), meaning “Earth”, was their innovation of 2005, a deep-sea scientific drilling vessel with the world's deepest drilling capacity of going 7,000 m below the seafloor^[xiii]. Powered by the vessel, Japan successfully extracted rare resources for its use. The vessel successfully gathered the sediments from a depth of nearly 6,000 meters (19,700 feet) near the island of Minamitorishima^[xiv]. This is going to be a boon for Japan, since the extraction areas have remained untouched for years, and the resources have the capacity to meet the world's needs for the next 700 years^[xv].

Conclusion

There has been a striking shift in Japan's rare-earth procuring strategy amid supply chain uncertainties. While stockpiling remains essential for safeguarding domestic industries during emergencies, however, it fails to address the long-term structural supply vulnerabilities, especially regarding reliance on China. To build more resilient supply networks, Japan is realigning its geographical partnerships collaborating actively with countries such as India, France, Australia, Russia, and the United States. Diversification is urgent given that rare-earth elements remain crucial for Japan's manufacturing sectors, especially for EVs, wind turbines, defence equipment, and the production of high-performance magnets. Japan has actively reached out to France, India, and Australia to secure stable supplies and reduce excessive reliance on China. Its engagement with India, following the discovery of hard-rock rare-earth deposits in Rajasthan and Gujarat, reflects this approach, as Tokyo has shown interest in supporting extraction and processing through technology transfers and expertise in exchange for stable future supplies^[xvi]. Japan recognises that its strongest long-term advantage lies in developing native technology, deep-sea extraction capabilities, and efficient domestic recycling infrastructure.

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*Apoorva Adrija, Research Intern, Indian Council of World Affairs, New Delhi
Disclaimer: Views expressed are personal. 

Endnotes 

^[i]Neely, Jason, et al. “What are rare earths and why are they so important?” Reuters, 26 February 2025, https://www.reuters.com/markets/commodities/what-are-rare-earth-metals-why-are-they-demand-2025-02-26/ . Accessed 21 April 2026.

^[ii]“Rare Earth Elements – Analysis.” IEA, 8 April 2026, https://www.iea.org/reports/rare-earth-elements . Accessed 12 May 2026.

^[iii]“Rare Earth Elements – Analysis.” IEA, 8 April 2026, https://www.iea.org/reports/rare-earth-elements . Accessed 12 May 2026.

^[iv]Neely, Jason, et al. “What are rare earths and why are they so important?” Reuters, 26 February 2025, https://www.reuters.com/markets/commodities/what-are-rare-earth-metals-why-are-they-demand-2025-02-26/ . Accessed 21 April 2026.

^[v]“China is piling pressure on Japan's Sanae Takaichi. Will it work?” BBC, 16 February 2026, https://www.bbc.com/news/articles/c86y3ndqlxwo . Accessed 2 May 2026.

^[vi] Riccio, Monica R. Eda. “Collisions and Territorial Disputes: The Sino-Japanese Incident of September 2010.” May 2011. https://core.ac.uk/download/41418751.pdf . Accessed 17 April 2026.

^[vii] “How Japan solved its rare earth minerals dependency issue | World Economic Forum.” The World Economic Forum, 13 October 2023, https://www.weforum.org/stories/2023/10/japan-rare-earth-minerals/ . Accessed 12 May 2026

^[viii] “How Japan solved its rare earth minerals dependency issue | World Economic Forum.” The World Economic Forum, 13 October 2023, https://www.weforum.org/stories/2023/10/japan-rare-earth-minerals/ . Accessed 12 May 2026

^[ix] “Japan's Economic Security Promotion Act and the implications for businesses.” The International Institute for Strategic Studies, https://www.iiss.org/publications/strategic-comments/2022/japans-economic-security-promotion-act-and-the-implications-for-businesses/ . Accessed 12 May 2026.

^[x] “Japan firms seen 'stockpiling' rare earths as Tokyo looks to G7 amid China row.” South China Morning Post, 12 January 2026, https://www.scmp.com/economy/global-economy/article/3339615/japan-firms-seen-stockpiling-rare-earths-tokyo-looks-g7-face-china-controls . Accessed 12 May 2026.

^[xi] Sojitz Corporation. “Securing Supply of Heavy Rare Earths to Japan with Additional Investment to Lynas.” JOGMEC, 7 March 2023, https://www.jogmec.go.jp/english/news/release/release_00228.html . Accessed 10 May 2026.

^[xii] Nagase, Fumito. “Japanese firms target rare earth magnet recycling.” 15 April 2026, https://www.argusmedia.com/en/news-and-insights/latest-market-news/2814202-japanese-firms-target-rare-earth-magnet-recycling . Accessed 12 May 2026.

^[xiii] “CHIKYU | JAMSTEC - JAPAN AGENCY FOR MARINE-EARTH SCIENCE AND TECHNOLOGY.” Japan Agency for Marine-Earth Science and Technology, https://www.jamstec.go.jp/e/about/equipment/ships/chikyu.html . Accessed 12 May 2026.

^[xiv] The Associated Press. “Japan retrieves rare earth-rich mud from seabed to lower reliance on China.” The Asahi Shimbun, 3 February 2026, https://www.asahi.com/ajw/articles/16327883 . Accessed 4 May 2026.

^[xv] “Japan finds a ‘rare earth giant’ 6000 meters below the ocean that could power the world for almost 700 years | World News.” The Times of India, 24 March 2026, https://timesofindia.indiatimes.com/world/rest-of-world/japan-finds-a-rare-earth-giant-6000-meters-below-the-ocean-that-could-power-the-world-for-almost-700-years/articleshow/129748427.cms . Accessed 12 May 2026.

^[xvi] Singh, Araudra. “INDIA-JAPAN ENGAGEMENT ON RARE EARTHS: STRATEGIC CONVERGENCE MEETS COMPLEMENTARITY.” March 23, 2026. Council for Strategic and Defense Research, https://csdronline.com/blind-spot/india-japan-engagement-on-rare-earths-strategic-convergence-meets-complementarity/ . Accessed 25 April 2026.