Japan to Expand Scale of Rare Earth Production

Japan to Expand Scale of Rare Earth Production

Recently, Japan's government announced that it will further expand the scale of its rare earth production to improve the security of the relevant supply chain and prevent China’s export control.

As a scarce and non-renewable strategic resource, rare earths have been widely used in our daily lives, ranging from chips, mobile phones, and fluorescent lights to aviation weapons and medical equipment. In general, this product has become an indispensable functional material for automobile manufacturing, general machinery, the electronic information industry, and agriculture.

As one of the world's major countries in the production and consumption of rare earths, China accounts for about 23% of the world's rare earths, which can meet about 80% of the world's demand. However, in order to protect national security, China promulgated the ‘Export Control Law’ on October 17, 2020. It is a new law that takes restrictive measures for sensitive exports that are vital to national security.

Data show that in November 2020, China's rare earth export volume was 2611.1 tons, a year-on-year decrease of 0.29%; the export value was US$28.9 million, an increase of 0.03% year-on-year. The export volume in December 2020 was 4167.5 tons, a decrease of 0.23% year-on-year; the export value was US$39.2 million, a year-on-year decrease of 0.12%.

From January to February 2021, the export volume was 7068.0 tons, an increase of 0.29% year-on-year; the export value was US$78.9 million, an increase of 0.86% year-on-year. In March 2021, the export volume was 4837.1 tons, a year-on-year increase of 7.8%; the export value was US$58.3 million, a year-on-year increase of 41.6%.

After the ‘Export Control Law’ came into effect, many countries such as the United States, Japan, India, and the United Kingdom have begun to increase investment in their rare earth industries, that is, in addition to the exchange of production technology and R&D funds, they will also cooperate in formulating international rules.

It is reported that more than 60% of rare earth production in Japan is provided by Chinese companies. In order to avoid China's ‘Export Control Law’ from adversely affecting the development of the country's high-tech industries, the country intends to cooperate in-depth with Australian companies to expand the scale of Australia's rare earth mining areas in order to reduce the risk of concentrated import of rare earth products in the same place.

Australia's rare earth reserves are second only to China, with proven rare earth oxide reserves of 4.4 million tons and prospective reserves of 1.7 million tons. However, most of the rare earth mines mined in the country are refined in countries with relatively low labor and land costs such as Malaysia and Vietnam, and then finished products such as rare earth magnets are introduced into Japan, because there are only a few small-scale refining facilities in the country.

In order to further strengthen the security of the supply chain, the Japanese government will assist in expanding local refining facilities and invite more domestic companies to invest in the industry. At the same time, it will also review relevant environmental protection and fire protection regulations, hoping to stable rare earth production in the country, and do everything possible to lower the cost.

Prior to this incident, the Japanese government had stated that it would expand financial assistance for the development of critical materials such as rare earths, and planned to increase the proportion of Japan’s oil, gas, metal, and mineral resources agency’s investment in mine exploration and development by more than 50% within this year to reduce private sector The burden on enterprises to accelerate the securing of important resources necessary for carbon reduction.

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