Japan's Growing Reliance on China for Rare Earths

Japan's efforts to diversify its rare earth supply have faced significant setbacks, leading to an increased dependence on China during the first half of this year. Data from Japanese customs shows that Japan imported 9,898 tonnes of rare earth metal equivalents from January to June, a 21% rise compared to the same period last year. China's share of these imports surged to 79.6%, a 6.5 percentage point increase from the previous year.

China's dominance is particularly striking in the import of cerium compounds, with its share rising by 14.8 percentage points to 50.6%, overtaking France as the leading supplier. Additionally, China's share of Japan's cerium oxide and yttrium oxide imports reached 83.5% and 98.7%, respectively, marking increases of 10.6 and 6.6 percentage points from the previous year.

Japan, entirely reliant on foreign sources for rare earths, has struggled to diversify its supply chains. Delays in rare earth projects outside China and low prices have hindered the development of new sources. The Japan Oil, Gas and Metals National Corporation (Jogmec) reports that despite a global surge in mining and smelting projects, progress remains slow.

A market participant from Metalnomist indicated that weak demand for permanent magnets in Japan might be a factor in the increased reliance on China. The slower growth in electric vehicle production and continued weak demand in sectors like industrial robots have affected overall magnet demand.

Japan's diversification strategy has seen some success with magnet-related rare earths like neodymium. However, lower domestic demand and potentially reduced imports of these materials have resulted in a relatively higher share of imports from China. While Japanese customs data does not detail the breakdown of "other compounds" including neodymium, Chinese customs data shows that China's global exports of neodymium oxide and neodymium metal decreased to 158 tonnes and 69 tonnes respectively from January to May, down by 15.9% and 78.9%.