How Japan built a rare-earth supply chain without China

As the US 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

- River Akira Davis and Kiuko Notoya

The Lynas refinery under construction in Kuantan, Malaysia. 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. – Rahman Roslan/The New York Times

(Rahman Roslan/The New York Times)

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 flareup 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.

President Donald 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.

Supply shock