Japan Increases Dependency on China for Rare Earths

Despite Japan's governmental efforts to diversify its rare earth supply, the country's dependence on China has intensified during the first half of this year. According to Japanese customs data, Japan imported 9,898 tonnes of rare earth metal equivalents from January to June, marking a 21% increase from the same period last year. China's contribution to these imports rose significantly, accounting for 79.6% of the total, up by 6.5 percentage points from the previous year.

China's dominance is particularly evident in the import of cerium compounds, where its share surged by 14.8 percentage points to 50.6%, overtaking France as the largest supplier. Furthermore, China's share of Japan's cerium oxide and yttrium oxide imports reached 83.5% and 98.7% respectively, with increases of 10.6 and 6.6 percentage points from a year earlier.

Japan, which relies entirely on foreign sources for rare earths, faces challenges in diversifying its supply. Efforts are hampered by delays in rare earth projects outside China and low prices affecting the development of new projects. The Japan Oil, Gas and Metals National Corporation (Jogmec) notes that despite the global launch of numerous mining and smelting projects, progress remains sluggish.

A market participant from Metalnomist suggests that weak demand for permanent magnets in Japan might have contributed to the increased reliance on China. The growth of electric vehicle production is slower, and demand for industrial robots and other sectors remains weak, further affecting magnet demand.

While Japan's diversification efforts have had some success with magnet-related rare earths like neodymium, lower domestic demand and possibly reduced imports of these materials have resulted in a higher relative share from China. Japanese customs data does not provide detailed breakdowns for "other compounds" including neodymium, but Chinese customs data indicates that China's global exports of neodymium oxide and neodymium metal fell to 158 tonnes and 69 tonnes respectively from January to May, down by 15.9% and 78.9%.