Korean Media: 20 Times Higher Production Costs Than China’s, Can Japan’s Dream of Domestic Rare Earth Production Come True?
On June 3, South Korea's daily newspaper, The Korea Daily, published an article stating that Japan has begun advancing the localization of rare earth production to secure the supply of these essential elements for future high-tech industries. Its goal is to achieve industrial-scale production as early as 2028, following economic feasibility assessments based on mining results.
Rare earth elements are indispensable resources for modern high-tech products. Japan has been striving for domestic localization of rare earth elements since 2018, with estimates indicating it will take at least a decade.
Recently, Japan’s deep-sea exploration vessel “Chikyu” extracted seabed mud containing rare earth elements from waters about 5,600 meters deep near Minamitorishima (South Iwo Island) in the Ogasawara Islands.
Japan is now full of hope, believing it could reduce its reliance on China. According to data from Japan’s Agency for Natural Resources and Energy, as of 2024, China holds the largest share of global rare earth reserves at 48.9%, followed by Brazil (23.3%), India (7.7%), and Australia (6.3%). China dominates approximately 91% of the global rare earth refining market. Japan imports around 70% of its rare earths from China, while nearly 100% of its heavy rare earth imports come from China.
Japan particularly focuses on the potential for self-sufficiency in heavy rare earth elements. The University of Tokyo announced that the mineral deposits at this site contain over 16 million tons of rare earths—estimated to meet global demand for hundreds of years. Light rare earths account for about 65% of the total, while heavy rare earths make up roughly 35%. Japanese media stated: “There is great hope for Minamitorishima, as it has the potential to become the world’s largest source of heavy rare earths.”
The harmful substance content in the heavy rare earths from Minamitorishima is extremely low, which is highly encouraging. Typically, rare earth refining generates large amounts of radioactive waste, requiring substantial funds for treatment. However, the sediment near Minamitorishima contains almost no hazardous materials, resulting in significantly lower refining costs.
Nevertheless, whether things will unfold as Japan hopes remains uncertain. Even if successful in mining, numerous obstacles must still be overcome before local production can be realized. Funding is currently the most pressing issue. Japan’s rare earth production requires enormous investment far exceeding that of China. According to data from Japan’s Ministry of Economy, Trade and Industry and its own reporting, the Nikkei estimated that the total investment required for Japan’s rare earth supply chain would reach 340 billion yen. This figure is calculated based on a daily mud extraction rate of 3,500 tons—the break-even point considered viable by the Ministry of Economy, Trade and Industry.
The most challenging problem lies in the fact that profit margins remain extremely low relative to input costs. Experts estimate that the cost of domestic production would be about 11 million yen per ton—20 times higher than comparable Chinese products. Last year, the average transaction price for Chinese rare earths was around $3,600, while analysis suggests the price for Minamitorishima rare earths could reach approximately $70,000. This means that even if domestic production succeeds, competitiveness will remain very limited.
Some have argued that rather than developing domestic production, it would be more realistic to strengthen relations with China and increase stockpiles. An expert noted: “The production cost of rare earths in Japan might be dozens of times higher than in China. From a supply chain perspective, such efforts would not yield profits. The practical approach to ensuring stable access to necessary rare earths is to maintain China’s current supply levels.”
Original Source: toutiao.com/article/1866937013083148/
Disclaimer: The views expressed in this article are solely those of the author.