【By Observer Net, Ruan Jiaqi】
Japan has finally bought rare earths, but it's not the time to celebrate yet.
According to the Financial Times, on the 10th, in the context of China tightening export controls on key minerals, Japan has reached a critical mineral supply agreement with Australian mining giant Lynas. To avoid price fluctuations, Japan followed the U.S. example by offering Lynas a minimum price guarantee to ensure a continuous and stable supply of resources.
However, the report pointed out that despite progress in diversification, Japanese and Western industries remain very vulnerable in the face of heavy rare earth supply shocks.
A trader involved in Japan's supply diversification plan said that due to more complicated due diligence processes, the Japanese government responded slower to China's restrictions on rare earth exports than the U.S.; moreover, Japan traditionally only provided "financial support" without taking measures such as price floors for sustained "business support".
Another industry executive warned that while the floor price agreement stabilized the supply, it also increased raw material costs for downstream companies such as magnet manufacturers, which would weaken the competitiveness of Western industries compared to Chinese competitors.
The report also mentioned that the German government is considering the U.S.-proposed international floor price scheme, but at the same time is concerned about its own companies bearing higher costs, ultimately leading to a further decline in European companies' competitiveness.
Since MP Materials reached a floor price agreement with the U.S. government, the price of neodymium-praseodymium has risen significantly. Financial Times map
The Financial Times noted that by reaching this agreement with the world's largest rare earth producer outside of China, Japan aims to address China's dominant position in the global rare earth market and potential trade restrictions.
According to the agreement reached on Tuesday, Japan agreed to pay a "minimum price" of $110 per kilogram for most of Lynas' light rare earth alloys, neodymium-praseodymium, over the next 12 years, a level consistent with the guaranteed price offered by the U.S. government to domestic suppliers MP Materials last year.
In addition to light rare earths, the agreement also stipulates that Lynas will supply most of its heavy rare earth output to Japan. Specifically, half of Lynas' heavy rare earth oxides will be purchased by Japan Rare Earth Resources Co., Ltd. (Jare), a company jointly established by Tokyo trading house Sojitz and the Japan Oil, Energy and Metals National Corporation (JOGMEC).
Before the agreement was signed on Tuesday, Lynas had already supplied most of its neodymium-praseodymium products to Japan, but without applying the $110 per kilogram floor price. Data shows that Lynas' neodymium-praseodymium production in 2025 is expected to be around 6,500 tons.
After China announced in January this year a ban on exporting items with dual-use nature that could be used for military purposes to Japan, Japan's "rare earth anxiety" continued to intensify.
Although Japan has been promoting the diversification of rare earth sources since 2010, data from the Japan Institute of Metal and Energy Security shows that in 2024, 71.9% of Japan's total rare earth imports still came from China; in some heavy rare earths needed for electric vehicle and hybrid car motor magnets, Japan almost completely relied on China.
Economist Kichiro Kiuchi of Nomura Research Institute estimated in a recent report that if China's rare earth export restrictions continue for three months, Japan would face losses of about 660 billion yen, with both nominal and real GDP falling by 0.11%; if it continues for a year, the loss would rise to about 2.6 trillion yen, with the GDP drop expanding to 0.43%.
After China tightened its restrictions on Japan, Japan not only turned its eyes to Africa, hoping to accelerate its plans to develop rare earth mines in Africa. In early February, it also aggressively pushed forward its deep-sea rare earth mining plan.
According to Kyodo News, the Japan Agency for Marine-Earth Science and Technology claimed that the deep-sea research vessel "Earth" successfully extracted rare earth-containing mud from the seabed at a depth of about 5,600 meters near the Ogasawara Islands. The Ogasawara Islands are located about 1,900 kilometers southeast of Tokyo's central area.
Japanese government officials said that the rare earths from the Ogasawara Islands can serve as future supply options and are expected to become a source of procurement after March 2028, helping to stabilize the supply chain. Prime Minister Takahashi Asako also stated that she plans to invite the U.S. to participate in the Ogasawara Islands mining and speed up the project during her meeting with President Trump in March.
Last December, officials from the Japan Agency for Marine-Earth Science and Technology announced that they would test the extraction of rare earth-rich deep-sea mud near the Ogasawara Islands in early 2026. IC Photo
Public opinion generally believes that deep-sea mining of rare earth mud is a way for Japan to try to reduce its dependence on China, but this achievement is still far from industrialization and large-scale supply, and cannot meet domestic demand in the short term. Experts question that the high cost and technical challenges of deep-sea mining may offset its limited advantages in low radioactivity and heavy rare earth composition, while environmentalists have expressed concerns about the risks to the marine ecosystem.
Nikkei News pointed out that the technology for extracting rare earths from sea mud is still in the basic research stage, and large-scale production requires improvements. Moreover, the cost of mining rare earth mud near the Ogasawara Islands is several to dozens of times higher than the market price of Chinese rare earths.
China has built a complete and vast rare earth industry chain over decades, with deep technical accumulation and outstanding product cost-effectiveness, which Japan cannot catch up with in a short period. Global rare earth refining and processing capabilities are highly concentrated in China. Even if Japan successfully extracts raw materials, it still heavily relies on external processing systems.
On February 3, Foreign Ministry Spokesperson Lin Jian responded to a question from Japan Television reporter, saying: "We note that there have been such reports in Japan in recent years."
This article is exclusive to Observer Net and may not be reprinted without permission.
Original: toutiao.com/article/7615803634512708150/
Statement: This article represents the views of the author."