Tivan and Sumitomo Corporation (Sumitomo) signed a memorandum of understanding (MoU) regarding the Sandover fluorite project (Sandover), located in the Northern Territory of Australia.

Under the MoU, both companies plan to negotiate commercial agreements for the collaborative development, financing, operation, marketing, and distribution of fluorite concentrate, thereby securing raw material feedstock supply to bolster the semiconductor and hydrofluoric acid (HF) industries.

Sandover is Tivan’s second fluorite project in collaboration with Sumitomo, further strengthening bilateral relationships between Australia and Japan. Japan does not have domestic fluorspar mining operations, making it completely reliant on imports to meet its domestic demand. This year, the majority of these imports came from China (87%), while the rest were sourced from Mongolia (7%) and Thailand (5%). With China slowing fluorspar exports amid domestic shortages and rising imports to meet demand, this strategic partnership with Australia will enable Japan to diversify its supply chain.

The Japanese HF industry needs to ramp up to keep pace

Japan plays a crucial role in the global semiconductor industry; however, the country relies on Chinese fluorspar to produce HF domestically, which is essential for removing residue from the interior of wafer fabrication machines as well as manufacturing and materials processing. Japan’s ongoing expansion of its semiconductor sector, alongside the growth in EVs and energy storage technologies, is contributing to the increased demand for HF, reinforcing the need for stable and diversified fluorspar supply chains to support Japan’s industrial base.

Imports of Chinese fluorspar into Japan have been in steady decline since 2022 due to a decrease in high-grade reserves in China, which has seen China shift toward importing growing volumes of fluorite for its own domestic market and underpins the need for international supply, such as that from Japan, to find new sources of raw material needed to produce HF. The strategic partnership between Sumitomo and Tivan, formalised through the signing of the MoU, reflects the practical efforts by Japan to enhance the security of its HF supply chain by reducing dependence on China for raw material feedstock.

In a parallel development, Tivan’s Speewah fluorite project has also attracted strategic support from the Japan Organisation for Metals and Energy Security (JOGMEC), which recently acquired a 49% equity stake in the joint venture, Japan Fluorite Corporation, established to advance the project. These partnerships align with the policy direction promoted by the USA through the CHIPS and Science Act and the Inflation Reduction Act. These pieces of legislation provide incentives for operations that aim to reduce supply chain reliance on foreign entities of concern, particularly those with implied links to China. In this context, the Sumitomo–Tivan agreement supports the alignment of Japan and Australia with US efforts to promote secure and transparent supply chains in sectors such as semiconductors and critical minerals.

However, fluorspar feedstock is only the first step in Japan’s independence. Domestic production of HF in Japan is insufficient to meet demand, with Japan sourcing nearly 98% of its HF through imports from China, which now accounts for almost 75% of global HF supply. China has already implemented export controls on materials such as antimony, gallium, germanium, and graphite, emphasising the risks associated with supply chains that are overreliant on China. HF, which is crucial for new energy and technology applications, could become a target in international trade wars.

Although the Japanese government has provided support for the expansion of domestic HF production, further action will be required as part of the downstream solution. Part of this support is highlighted by the partial funding of an HF facility in Fukuoka Prefecture, undertaken by Mexichem Fluor Japan (Koura’s Japanese entity) and Sojitz, which was reportedly scheduled for completion this year. This facility will use acidspar sourced from Koura’s fluorspar mine in San Luis Potosí, Mexico. Mexico shares strong trade and political ties with the USA through the United States–Mexico–Canada (USMC) Free Trade Agreement, which, as an example, reflects the way US-aligned countries are now working together across different stages of the supply chain.

Japan’s longstanding electronics industry to date

Japan’s historical relationship with the electronics industry dates back to the early 1950s, when its industry rose from insignificance to a level roughly on par with that of the USA. This growth is attributed to the establishment of relationships with and the importation of advanced technology from leading US firms such as RCA.

From manufacturing approximately 7,000 transistors in 1953, Japanese manufacturing capabilities increased to more than 100,000,000 in the second half of the decade. The US–Japan semiconductor trade agreement reached in 1986 limited Japan’s exports, forcing Japan to open its market and leading to the decline of its semiconductor industry. While Japan never reached the heights of the US electronic industry, it focused on low-end, alloy-junction transistors. Regardless, the relationship between the USA and Japan grew rapidly, with notable names such as Sony, Mitsubishi, and Toshiba establishing their foothold in the market.

Geopolitical tensions and trade wars

Following chip shortages during the pandemic, the USA, China, and other notable semiconductor-producing countries announced policies and investments related to domestic chip production. The most significant of these announcements was the US CHIPS and Science Act of 2022, which mobilised US$254Bn in funding for the development of domestic chip production, R&D, and training programmes. Similarly, the EU passed the European Chips Act (ECA) in an effort to encourage semiconductor production by mobilising US$50Bn in funding, of which US$13Bn will be used specifically for R&D. Since 2014, China has registered a total capital of US$95Bn through three rounds of funding for similar investments into R&D and expanding domestic semiconductor production.

The US CHIPS and Science Act signalled elevated interest in domestic production by the US government. Shortly after the approval of the CHIPS Act, the USA began to limit high-end semiconductor chip technology to Chinese producers between 2022 and 2024, under Section 301. US allies, such as the Netherlands, joined the effort by limiting high-end chip-making tools (such as EUV machines) and technological capabilities to Chinese producers. Japan also participated in this effort, although indirectly, by restricting the export of 23 kinds of chip-making equipment to all consumers. China’s chip sector is largely focused on “legacy” (older) chips, and a lack of access to up-to-date technologies would impact its high-end chip-making capabilities. In response to US and allied restrictions between 2022 and 2024, the Chinese Ministry of Commerce (MOFCOM) announced export restrictions on the semiconductor materials gallium and germanium in July 2023. Subsequently, these restrictions escalated with China’s outright ban of the export of gallium and germanium to the USA in December 2024. The ban was later extended to antimony, although antimony is only used in semiconductors in relatively small volumes.

Protectionist policies: the spearhead of the decade

The Japanese government invested a fiscal volume of US$26Bn in the domestic semiconductor supply chain from 2021 to 2023 under the Fiscal System Council, part of the Ministry of Finance. Part of this funding included US$8.1Bn towards Taiwan Semiconductor Manufacturing Company (TSMC) for the construction of the in-progress Kumamoto fab (Fab 23) unit. While the second phase was initially slated for full production in Q1 2025, production may be delayed to 2029 due to issues related to traffic congestion. TSMC’s second fab is set to begin construction in H2 2025.

Although fluorspar has not received as much attention from a chip trade wars point of view, its role in removing residue from the interior of wafer fabrication machines makes its supply chain dynamics relevant. Given the current geopolitical tensions between the USA and China, the reallocation of semiconductor-based investments to countries with strong ties to the USA could be beneficial for Japan. This reinforces the need for the Japanese government to secure its supply of fluorspar, which has been on its critical minerals list since 2018. Regarding Koura and Sojitz’s HF project currently in the pipeline, Mexico and Australia will supply the raw material, Japan will handle the processing, and the USA will support downstream demand through semiconductor production and policy, emphasising the need for resilient trade agreements in order to break from reliance on supply chains linked to China.