Editorial 1 : Tokyo Tutorial: Countering China’s Rare Earths Choke
Context: Rare earth elements (REEs), comprising 17 critical minerals, lie at the centre of modern technological manufacturing. They are indispensable for electric vehicles, wind turbines, smart phones, semiconductors, defence equipment and robotics. Despite their strategic importance, global supply chains are highly vulnerable because China dominates mining, processing and export of rare earths, accounting for over 60–70% of global production and nearly 85–90% of world refining capacity.
China’s Rare Earths Leverage:
- China has repeatedly used rare earths as a geopolitical tool.
- The most notable instance occurred in 2010, when a maritime dispute with Japan in the East China Sea triggered Beijing’s abrupt suspension of rare earth exports to Japan.
- The move exposed Japan’s extreme vulnerability as it was dependent on China for over 90% of its rare earths needs.
- This episode became the turning point in Japan’s strategic thinking, pushing Tokyo towards supply chain diversification and self-reliance.
- In recent years, China has also tightened export controls on critical minerals like gallium, germanium and graphite, citing “national security concerns”.
- Such measures have reinforced global concerns about China's control over strategic minerals and the risks associated with overdependence.
Japan’s Multi-Pronged Strategy for Rare Earth Resilience:
- Japan responded with a comprehensive, long-term rare earths security strategy aimed at reducing dependence on China. The strategy’s key pillars include:
- Diversified Supply Sources: Japan aggressively sought alternative suppliers across the world. It partnered with Australia, Vietnam, India, and several African and Latin American countries. One of the most significant initiatives was Japan’s collaboration with Australia’s Lynas Corporation, the world’s largest rare earths producer outside China. This move substantially reduced Japanese firms’ vulnerability.
- Recycling of Rare Earths: Japan is a global pioneer in rare earth recycling technologies. It has developed processes to extract rare earths from discarded electronics, hybrid vehicle batteries, and industrial waste. This reduces pressure on mining and provides an environmentally sustainable source of critical minerals.
- Technological Innovation and Substitution: Japan invested heavily in research to develop technologies that either reduce rare earth usage or find substitutes. Its advancements in motor technology and materials engineering helped lower industry-level dependence on specific rare earth elements.
- Stockpiling for Strategic Security: Tokyo built strategic reserves of rare earths to cushion against supply disruptions. These stockpiles effectively provide a buffer of several months for key industries.
- State Support and Public–Private Partnerships: Japan’s government collaborated closely with private industry, providing financing, insurance, and diplomatic support to Japanese firms operating abroad. It also undertook long-term agreements with partner nations to ensure supply reliability.
Impact of Japan’s Policy:
- Japan’s dependence on China for rare earth imports has fallen from over 90% in 2010 to below 60% today.
- This demonstrates how long-term planning, diversification, and technology investments can reduce strategic vulnerability.
- Japan today is considered a global model for rare earths risk mitigation.
India’s REE Exposure and Lessons from Japan:
- India imports a significant portion of rare earth elements despite having its own monazite reserves along the coasts of Kerala and Odisha.
- However, most Indian mineral extraction is restricted due to regulatory barriers, technological limitations, and lack of private sector participation.
- India’s dependence on Chinese rare earths remains substantial.
Key lessons for India from the Japanese approach include:
- Diversify supply chains through partnerships with countries like Australia, Vietnam, and African nations.
- Promote rare earth recycling, a largely untapped domain in India.
- Invest in R&D for processing technologies and material substitution.
- Create strategic mineral stockpiles for defence and manufacturing sectors.
- Allow private sector participation under stringent regulation to scale domestic extraction.
- Integrate rare earths strategy with Make in India and advanced manufacturing goals.
Way Forward:
Japan’s rare earths strategy shows how a country can navigate resource vulnerabilities through diversification, innovation, state-industry collaboration, and strategic foresight. As geopolitics increases pressure on global supply chains, nations like India must consider similar approaches to secure their technological and strategic autonomy. Rare earths resilience is no longer merely an industrial necessity; it is a pillar of economic security and national power.