Allies and Partners are reshaping supply chains for rare-earth elements (REE) to reduce reliance on China-controlled critical minerals. Adding to the urgency are Beijing’s expanding export controls on Japanese firms, prompting Tokyo and its partners to invest in alternative sources, boost domestic processing and deepen regional cooperation.
The risks are structural and long-standing. REEs are essential for producing components used in civilian and military technologies ranging from smartphones and electric vehicles to satellites and missile systems.
“These rare-earth materials are not actually that rare. The problem is that about 90% of supply is dominated by China, and roughly 75-80% of processing is also controlled by China,” Stephen Nagy, a professor at Tokyo’s International Christian University and a senior fellow at the Macdonald-Laurier Institute, a Canada-based think tank, told FORUM.
Such dominance creates the potential for economic disruption. Japan is the world’s largest importer of rare-earth metals, with China accounting for 63% of those imports in 2024, the Center for Strategic and International Studies, a United States-based think tank, reported in January 2026.
“China’s monopolization — and potential weaponization — of rare earths could shut down many of Japan’s signature industries and severely harm its economy,” Nagy said. “Japan’s central objective is to prevent the emergence of Chinese hegemony in the Indo-Pacific.”
In February 2026, China’s Commerce Ministry added 20 Japanese companies, including major defense contractors, to its export control list, limiting access to dual-use materials such as REEs. The move is widely viewed as part of Beijing’s economic coercion targeting key national security industries.
In response, Japan is accelerating diversification. Since 2010, when Beijing first threatened restrictions on REE exports, Tokyo has pursued alternative sourcing, recycling initiatives and overseas investment.
A key pillar of Japan’s strategy is Southeast Asia, especially Vietnam. Tokyo is investing heavily in rare-earth refining and magnet production, aligning with Hanoi’s industrial goals.
Vietnam, meanwhile, is seeking to optimize its own critical resources. In January 2026, it banned unprocessed rare-earth exports, guaranteeing minerals are refined domestically and leveraging its natural resources to develop domestic industrial capacity.
“Japan wants to weaken [China’s] advantage by investing in processing capacity in countries like Vietnam and Malaysia,” Nagy said. “The goal is to ensure that rare earths cannot be used as a coercive tool in bilateral relations.”
Beyond Southeast Asia, Japan is exploring potential sources of REEs. In February 2026, Tokyo announced that a Japanese research vessel retrieved REE-rich seabed mud near Japan’s remote Minamitori Island, a coral atoll in the northwestern Pacific, potentially unlocking decades of domestic supply for certain minerals.
Tokyo’s resource strategy is supported by the Japan Organization for Metals and Energy Security, which provides financing, technical expertise and stockpiling to secure critical materials. The organization’s expanded mandate covers renewable energy and advanced resource technologies, reflecting the link between energy transition and economic security.
At the strategic level, Japan is closely coordinating with the U.S. In March 2026, the longtime allies launched a framework to prevent disruptions in critical mineral supply chains, including real-time information sharing and mutual guarantees. The initiative anchors a network of partnerships spanning the Indo-Pacific and beyond.
“The United States and Japan are taking an important step to expand the production and diversity of critical minerals,” U.S. Ambassador Jamieson Greer stated. “Today’s announcement reinforces our supply chain resilience and energy security with a key partner in the Indo-Pacific region.”