Japan’s Mineral Security: Ready for China’s Impact?
- Concerns are rising within the auto industry as China's export restrictions on rare earth elements begin to take hold.
- Amaroq CEO Eldur Olafsson noted the swift impact of China's actions.
- The situation has particularly affected Japanese automakers.
China’s rare earth export curbs are sending shockwaves through the auto industry,forcing production halts and prompting a frantic search for option,reliable sources.This situation is especially acute for Japanese automakers, who are actively seeking solutions to mitigate the impact. Japan’s history with China’s resource control, stemming from the 2010 export ban, has fueled proactive measures, including diversification efforts and investments in alternative technologies. Learn how News Directory 3 is tracking these significant shifts and what steps Japan is taking to bolster its mineral security as it grapples with these challenges. Discover what’s next for Japan’s automotive future.
China Rare Earth Export Curbs Disrupt Auto Industry Production
updated June 21, 2025
Concerns are rising within the auto industry as China’s export restrictions on rare earth elements begin to take hold. These minerals are essential for manufacturing vehicles, robotics, and defense equipment. The restrictions have already led to production suspensions and are pushing companies to seek alternative supply chains.
Amaroq CEO Eldur Olafsson noted the swift impact of China’s actions. “When the tariff war started and tariffs were put on China, the first thing that china did was say ’we’re going to stop exporting rare earths.’ A few weeks later, we couldn’t manufacture a car in America or in Europe, so it is a real problem,” Olafsson told CNBC.
The situation has particularly affected Japanese automakers. Suzuki Motor suspended production of its Swift model, with local media attributing the halt to China’s rare earth export restrictions. Nissan is also exploring ways to mitigate the impact by collaborating with the Japanese government and industry associations.
Nissan CEO Ivan Espinosa said the company needs to continue finding alternatives for the future, keeping flexibility and keeping their options open.
A push for alternatives to rare earth minerals
Niron Magnetics’s Jonathan Rowntree emphasized the need for a comprehensive approach involving government and industry to counter China’s mineral dominance. This includes accelerating permits for domestic mines and investing in new alternatives to ensure sufficient magnet supplies.
“Everyone has seen that this supply bottleneck is an issue. We’ve all known for a long time that this could happen, but now it has actually happened,” Rowntree said.
Europe’s domestic production of rare earths is limited, relying heavily on imports, especially from China. Though, plans are underway to develop domestic resources and processing capabilities.
Solvay,a Belgian chemical group operating the largest rare earths processing plant outside of China in La rochelle,France,aims to supply 30% of Europe’s processed rare earths demand for permanent magnets by 2030.
Gracelin Baskaran, director of the critical minerals security program at the Center for Strategic and International Studies, said the U.S.and European Union will need to collaborate to create a market for non-Chinese rare earths.
Baskaran noted that tax credits and subsidies will be essential to ensure that non-Chinese projects can build and scale up, given the widespread use of rare earths in modern industries.
Japan has been proactive in addressing supply chain vulnerabilities since China’s 2010 export ban targeting Tokyo following a territorial dispute. Even though the embargo lasted only two months, it motivated Japan, the world’s fourth-largest economy, to reassess its supply chain security.
Alongside stockpiling critical minerals, Japan has diversified its supply sources and invested in alternative technologies to reduce its reliance on China.
The U.S. is also taking steps to reduce reliance on China for rare earth minerals. MP Materials’ Mountain Pass mine in California is the only active rare earth mine in the U.S.The company is investing in processing facilities to create a domestic supply chain.
The U.S. Department of Defense is also funding research into alternative materials that can be used in place of rare earth minerals.
These efforts are aimed at reducing the risk of supply disruptions and ensuring that the U.S. has access to the critical minerals it needs for its economy and national security.