Japan Rare Earth Supply Chain Strategy: Alliance Formed to Blunt China's 'Economic Weapon'

China's grip on rare earths is tightening, but Japan's not standing still. Japanese Finance Minister Satsuki Katayama told Nikkei in an exclusive interview that Beijing's ability to control critical mineral supplies is creating unacceptable uncertainty for businesses. She emphasized that Japan must work with the U.S. and Europe to build a resilient supply chain and stop China from using these minerals as an economic weapon.

Japan Rare Earth Supply Chain Strategy: Building a 'Market of Democracies'

The vision isn't just about finding new suppliers; it's about creating a "market of democracies." Katayama envisions a framework where Japan, the U.S., and Europe establish a self-sustaining ecosystem for rare earths. This move comes as China increasingly curbs exports, including those for civilian use, heightening tensions in the Indo-Pacific region.

Concrete steps are already in motion. Japan plans to start processing rare-earth mud from deep-sea reserves by 2027. Additionally, Tokyo is seeking partnerships with countries like Saudi Arabia to secure raw materials. By diversifying its sources and investing in domestic processing, Japan aims to protect its high-tech sectors—from semiconductors to electric vehicles—from geopolitical blackmail.