China’s Rare Earth Export Restrictions Prompt Japan to Accelerate Sourcing from Australia and India

Type: News Repost

> This article is reposted by AIC Engineering. Copyright belongs to the original author. Please refer to the "Sources" section at the end for the original link.

China’s Rare Earth Export Bottlenecks Prompt Japan to Seek Alternatives in Australia and India

June 8, 2026 | Central News Agency (CNA) / Tokyo Dispatch

China has designated rare earth elements as strategic resources and intensified export controls. Compounded by deteriorating Sino-Japanese relations, China’s rare earth exports to Japan have recently experienced a sharp decline. According to data analysis by Nikkei, China’s rare earth shipments to Japan in March and April of this year fell by 88% and 82%, respectively, compared to the same period last year. Japanese enterprises are now accelerating efforts to secure alternative supply sources in countries such as Australia and India.

The report notes that since January, China has further tightened export reviews for Japan under regulations governing dual-use items. Beijing’s dissatisfaction with remarks made by Japanese Prime Minister Sanae Takaichi last November regarding a potential "Taiwan contingency" has prompted China to leverage its position—controlling approximately 70% of global rare earth production—to exert greater economic pressure on Japan.

China’s Ministry of Commerce implemented export controls on seven rare earth products, including dysprosium and terbium, as early as April 2025. Official statistics indicate that from January to April this year, total exports of these seven rare earth categories to Japan decreased by 34% year-on-year. The decline accelerated in March (down 88%) and April (down 82%), surpassing the 42% drop recorded in May 2025, immediately following the initial implementation of export restrictions.

By product category, exports of dysprosium and terbium—indispensable for electric vehicle (EV) motors—have completely halted to Japan since January.

The export reduction of another critical rare earth element, yttrium, is equally severe. Yttrium is widely utilized in laser medical equipment, semiconductor manufacturing tools, and aerospace applications, and is widely considered difficult to substitute. From January to April, Japan’s import volume of yttrium fell by over 90% compared to the previous year.

A representative affiliated with the Japanese Chamber of Commerce and Industry in China noted that Beijing briefly eased export restrictions following a Sino-Japanese leadership meeting in October last year. However, as intergovernmental exchanges stalled entering 2026, export flows have once again been disrupted.

Beyond raw rare earth materials, the export of high-performance magnets containing controlled rare earth elements has also become increasingly difficult. A senior executive at a Japanese manufacturing firm disclosed that "export licenses for high-performance magnets doped with rare earth elements such as dysprosium are currently nearly impossible to obtain."

China not only controls the majority of global rare earth mineral reserves but also commands over 90% of the global market share in rare earth smelting and processing. This structural dominance makes it highly challenging for other nations to completely decouple from Chinese supply chains in the short term.

Japanese companies are actively pursuing non-Chinese alternatives. JX Metals has invested in Australian rare earth mining projects, while Proterial (formerly Hitachi Metals) is evaluating the construction of a neodymium magnet facility in India that would operate without heavy rare earths. Australia currently ranks as the world’s third-largest rare earth producer, with India holding the sixth position.

Resource recycling is also emerging as a viable pathway. Mitsubishi Materials recently announced an investment in a U.S.-based company specializing in rare earth recycling technologies to enhance circular resource utilization capabilities.

Nevertheless, substitution remains highly complex. A senior executive of a major Japanese manufacturer stationed in China warned that "if the current situation persists, domestic production in Japan will be impacted, potentially leading to factory shutdowns." To mitigate this risk, some companies have begun restructuring their supply chain models, such as completing the assembly of electronic components like motors in China before exporting the finished sub-assemblies to Japan.

The Japanese government is closely monitoring whether material shortages will force companies to relocate production bases to China. This vigilance stems from historical precedent: during the 2010 Senkaku Islands (Diaoyu Islands) dispute, China temporarily suspended rare earth exports to Japan, which compelled several Japanese magnet manufacturers to establish facilities in China. This move inadvertently accelerated the rise of China’s domestic magnet industry. Tokyo is now concerned that a similar dynamic could repeat under current trade pressures.

Sources

• udn.com (Original publication)
• Central News Agency (CNA) / Nikkei / Xinhua (Data and reporting cited within the article)
• Original link: 中國大陸稀土出口卡關 日本急尋澳洲、印度替代來源 | 全球財經 | 全球 | 聯合新聞網