China's rare-earth exports to Japan plunge 80 percent, sending firms scrambling

Data from Japan's Ministry of Finance cited by Nikkei Asia show that the volume of rare-earth metals such as samarium, neodymium and dysprosium imported from China in May fell by 80 percent year-on-year. The drop has been linked to bottlenecks in the dual-use materials export licensing system that Beijing introduced last year. Major manufacturers including Toyota, Panasonic and Hitachi have warned of supply disruptions.

For these metals, which are critical to electric-vehicle motors, wind turbines and precision electronics, Japan is seeking alternative channels through Lynas Rare Earths in Australia and new refinery projects in Vietnam. JOGMEC said it is evaluating partnership stakes in new exploration projects in Mozambique and Brazil. The Ministry of Finance has put on the table the option of expanding the strategic rare-earth reserve from 90 to 180 days.

Beijing says the export quotas are being reviewed on national security grounds while the Japanese government is keeping diplomatic channels open. In parallel, the EU and the United States have accelerated their own alternative-source strategies. Analysts expect additional pressure on material prices in the short term; the spot price of neodymium has risen 35 percent over the past three months. This is not investment advice.