Highlights

• China controls 69% of global rare earth mining but 85-90% of processing capacity—the true bottleneck isn't geology, it's refining and separation infrastructure.
• Japan's strategic advantage lies in high-purity separation, magnet redesign, and urban mining recycling rather than competing with China on raw volume production.
• Deep-sea mining near Minamitorishima Island offers heavy rare earth reserves but remains economically unviable at $50+/kg, serving only as long-term contingency supply.

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A new Resources Policy analysis (opens in a new tab) by Qinxue Wang (opens in a new tab) of Japan’s National Institute for Environmental Studies lays out a pragmatic roadmap for how a resource-poor but technology-intensive economy can reduce exposure in a rare earth system still overwhelmingly shaped by China. The study’s central conclusion is strikingly clear and not a surprise at all for the Rare Earth Exchanges™ community: the true bottleneck in rare earth supply is not geology, but processing. With China controlling roughly 69% of global mine output and an estimated 85–90% of refining andseparation capacity, the paper argues that Japan’s strategicadvantage lies not in trying to out-mine China, but in diversifying supply, reducing material intensity, expanding recycling, and using ESG and “nature-positive” governance to shift competition from raw volume to verified quality.

Qinxue Wang, PhD, Japan’s National Institute for Environmental Studies

Study Methods

This paper is an analytical review, not a quantitative forecast. Wang synthesizes peer-reviewed literature, Japanese policy documents (including METI and JOGMEC strategies), and global datasets from the USGS and IEA. Rather than modeling prices or tonnage, the study develops three qualitative scenarios for 2030–2035—conservative, central, and ambitious—to test how Japan’s supply security responds to varying levels of non-Chinese capacity growth, recycling uptake, and technological innovation. The scenarios function as stress tests, clarifying trade-offs rather than predicting exact outcomes.

Deep Sea Mining off of Minamitorishima Island--Expensive

What the study finds

• Deep-sea REY-rich mud near Minamitorishima Island (within Japan’s EEZ) contains unusually high concentrations of heavy rare earths such as dysprosium and terbium. However, very high costs (frequently cited above ~$50/kg REO), extreme technical complexity, and unresolved environmental risks mean these deposits are best understood as a strategic contingency reserve, not a commercially competitive substitute for Chinese supply in the near to medium term.
• Japan’s real comparative advantage lies upstream and downstream of mining: high-purity separation, heavy-rare-earth-lean magnet design, and advanced “urban mining” through recycling. These levers reduce both geopolitical risk and environmental footprint more effectively than opening new primary mines.
• In the central scenario, China’s share of global rare earth mining could moderate to roughly 50–55% by 2035, allowing Japan to construct a materially more resilient supply matrix—without assuming China ceases to be the dominant player.
• Governance itself becomes strategy: standards, traceability, and alliances can reframe competition away from lowest-cost volume toward verified environmental and social performance.

Implications for Investors and Policymakers

The study reframes the “China problem” in precise terms: processing capacity—not ore—remains the monopoly lever. For Rare Earth Exchanges readers, the signal is clear. Capital and industrial policy should prioritize separation, metals and alloys, magnet redesign, and scalable recycling systems, even if this entails paying a “green premium” to secure resilient, auditable supply chains.

Limitations and Controversies

Because the scenarios are heuristic, outcomes depend heavily on assumptions about project execution, recycling rates, and policy enforcement, all under conditions of imperfect data transparency. Deep-sea mining remains politically and scientifically contentious—Japan’s recent test retrievals show momentum, but ecological uncertainty and pressure from international moratoriums constrain social license.

Diversification pathways also raise ethical and geopolitical challenges, including Myanmar-linked heavy REE feedstocks, ESG disputes around processing hubs such as Malaysia, and the ever-present risk of predatory pricing that could strand emerging non-Chinese projects.

Bottom line: Japan cannot—and need not—outscale China. Its most credible path to rare earth security is to substitute volume with technology, efficiency, and governance, positioning itself as a high-trust, high-quality node in a still China-influenced but increasingly multipolar rare earth system.