Japan’s finance minister has publicly addressed the urgent need for the nation to reduce its reliance on China’s rare earths, emphasizing the importance of taking away China’s ability to ‘weaponize’ these critical minerals. This call for a step forward is made in light of growing geopolitical strains. More recently, China has taken steps to ban rare-earths exports for civilian purposes to Japan.
Rare earth elements are critical components across many modern technologies from mobile devices to clean energy applications. Unfortunately, their value has increased as global supply chains are increasingly used as tools of statecraft. In the present day, China has managed to secure and maintain vast market share in the rare earth space. In turn, Japan seeks to reconfigure its own supply chain to advance its national interests. If realized, this change would materially transform where rare earths are sourced and produced.
In an effort to solidify its position, LS Eco Energy is making a fascinating bet. The company has pledged $19 million to establish rare earth resources in Vietnam. This historic investment is a part of the larger movement to diversify our supply sources after China introduced recent export restrictions. Vietnam’s significance Vietnam is quickly becoming a global player in the rare earths market. It could provide the world with a non-market currently dominated by China.
This current geopolitical climate has driven up rare earth prices by a dramatic 120%. At the same time, the demand for non-China sources of these minerals is rapidly increasing. This upturn is powering Australian producer Lynas, as they benefit from fundamentally altered market conditions. Lynas has been at the forefront of rare earth production in Australia, which is actively exploring cooperative ventures with Japan to bolster its critical minerals supply chain.
The finance minister’s comments highlight how serious Japan is about reducing its dependence on China’s rare earths. This welcome focus is in response to recent and ongoing export curbs that imperil industrial production and technological progress. Japan’s primary goal is to obtain a more stable supply of critical materials. In order to do this, the country is building close ties with Australia and Vietnam.
As countries navigate the complexities of global trade and supply chain vulnerabilities, the rare earths market continues to play a pivotal role. This need for countries to have their own supply chains is amplified by the current geopolitical climate with great power rivalry.