Japan's access to heavy rare earth elements faces new challenges with tightening of Chinese dual-use controls in geopolitical retaliation

China’s Ministry of Commerce (MOFCOM) has announced that it will strengthen export controls on dual-use items destined for Japanese consumers. The tightening of dual-use restrictions are reported by a MOFCOM spokesperson to be in response to comments made by the Japanese Prime Minister in late 2025 relating to Taiwan.

Dual-use restrictions are wide reaching, impacting access to critical materials across a range of downstream supply chains, particularly high-technology and defence applications.

The classification of heavy rare earth elements (HREEs) and downstream materials containing >0.1% of these elements as dual-use products in 2025, raised significant attention in the global market as few alternative suppliers existed outside of the Chinese market. Japan remains dependent on Chinese supplies of HREEs for its domestic production of high performance NdFeB permanent magnet alloys. Japanese domestic production is supplemented by imports of NdFeB products from China, which, dependent on the HREE content, are also largely classed as dual-use products.

Tighter restrictions on dual-use exports to Japan from China have the potential to significantly disrupt Japanese NdFeB production, which would have a cascading impact on downstream industries such as automotive, renewable energy, robotics and military component manufacturers over the longer term.

Japanese consumers of HREEs and NdFeB have been cautious of supply chain disruption, with several building inventories to mitigate short-term disruptions. A prolonged tightening of dual-use restrictions has the potential to be damaging to Japanese industrial output, caused by raw material deficits for key materials.

For HREEs, Japan has considered developing alternative supply routes, investing in Carester’s separation facility under development in France, and also via its involvement with Lynas Rare Earths in Malaysia, which has developed and expanded HREE separation during 2025.

The reliance on Lynas Rare Earths as an alternative to Chinese supply by US, European and now Japanese consumers has potential to strain relations between these regional centres as alternative supply is commissioned and ramped-up in 2026-2027.