Rare Earths as Diplomatic Weapons Again — China's "Pressure," Japan's Lessons, and How Will the U.S. Respond?

1. Introduction: The "Senkaku Shock" Revived After 15 Years

In the spring of 2025, Beijing imposed export licensing on seven rare earth elements essential for military and EVs out of the 17 rare earth elements. Obtaining a license takes up to 45 business days, and submitting detailed information about the final customer is mandatoryCSIS. This is a reenactment of the nightmare when exports to Japan "stopped" following a fishing boat collision incident in 2010. At that time, Japan vowed to seek alternative procurement and invest in recycling, but as of 2024, it still relied on China for 70% of its imports.

2. Immediate Impact on Japan: The Halted Swift

A month after the regulation, Suzuki halted the production line of its mainstay "Swift" from May 26 to June 6. The reason was "a shortage of motor magnets due to delays in Chinese export permits," according to Reuters. Similar parts shortages affected Toyota suppliers and European parts manufacturers, with CLEPA warning that "inventory is only a few weeks' worth."e2open.com.

3. Not Just "Someone Else's Problem" for America

Meanwhile, the U.S. managed to resume imports temporarily with a sudden "reopening agreement" in June, but experts say "vulnerability has rather expanded."The Wall Street Journal. CSIS states, "There are zero heavy rare earth separation facilities in the U.S. The 2027 goal of 'from mine to magnet' is far off."CSIS. In May, U.S. imports of Chinese magnets were only 46 tons, a 93% decrease compared to the same month last yeare2open.com.

4. The Temperature Difference Reflected on Social Media: Mockery, Anxiety, and Defiance

In July, Bloomberg Japan reported "China's rare earth exports at the highest level since 2009," and the volatility from sharp decline to sharp increase became a hot topic among speculatorsX (formerly Twitter). The hashtag #RareEarthShock on social media exceeded 15,000 posts per hour at its peak, showing an unusual spread as geopolitical news.

5. Reactions from Companies and Governments

• Japan: JOGMEC and Sumitomo Metal Mining made additional investments in Lynas expansion in Australia. They invested 100 million euros in a Carester subsidiary to introduce European refining technology for heavy rare earths.

• United States: MP Materials aims to establish a capacity of 1,000 tons of NdFeB magnets in Texas by the end of 2025, but it is far from China's scale of 180,000 tonsCSIS.

• Resource Countries Outside China: Heavy rare earth development is accelerating in places like Browns Range in Australia and Araxa in Brazil. However, the refining process still heavily depends on China.

6. Cost Estimation: How Much for "Self-Sufficiency"?

According to estimates by E2open, if magnet exports decrease by 74% for a month, the EBIT of automakers would shrink by an average of 1.8 pointse2open.com. Japanese companies have invested over $1 billion in alternative procurement since 2010, but they still couldn't escape 70% dependency. Full self-sufficiency would require vertical integration from "mining → refining → magnets" and continuous investment of around $3 billion annually.

7. Lessons Learned: "Partial Self-Sufficiency" Is Not a Shield

• A goal of reducing dependency to ◯% is insufficient. Export licensing tightens through "time" and "information," not "quantity."

• Refining and Magnet Manufacturing are the biggest bottlenecks. Before "de-China" of ores, domestic chemical and powder metallurgy is urgently needed.

• Allied Cooperation is a realistic solution with a functional division of "ores: Australia and Brazil, refining: joint investment by Japan, the U.S., and Europe."

• Recycling and Rare Earth-Saving Design (such as ferrite substitute magnets) should be incorporated into the system during peacetime.

8. Conclusion: Who Will Prepare for the Next Time?

The "Senkaku Shock" of 2010 gave Japanese companies "time to forget the crisis," and the 2025 regulations showed that the homework was unfinished. The U.S. is now standing at the same entrance. As resource nationalism intensifies, the word "too late" could be directed at another country tomorrow. Japan and the U.S. must share lessons and urgently pursue **"re-domestication" of the supply chain, including refining and magnet manufacturing.**

Powered by Froala Editor