Highlights

• Japan reduced Chinese rare earth imports from 85% (2009) to 58% (2020) through diversification, magnet innovation, and stockpiling—but heavy rare earth refining remains China-dominated.
• Technical engineering breakthroughs like dysprosium reduction in magnets bought resilience, yet systemic supply chain sovereignty remains elusive without ex-China separation capacity.
• Proposed price floors and government purchase guarantees face enormous execution risk; recycling stays marginal at ~1%, and deep-sea mining requires patient capital and political will.

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This Rare Earth Exchanges™ analysis reviews a Brookings commentary (opens in a new tab) on Japan’s critical minerals strategy. We separate verifiable facts from policy aspirations, assess claims about China's dependence and price guarantees, and examine what Japan’s experience means for U.S., European, and allied rare earth supply chains. Investors gain clarity on what works, what remains unresolved, and where policy ambition may exceed market reality.

A 15-Year Lesson Born From a Shock

In a nutshell, after China informally restricted rare-earth exports to Japan in 2010 during the Senkaku Islands dispute, Japan moved quickly to reduce risk. According to the Brookings workshop featuring Eiki Tagami and Mireya Solís, Japan reduced its reliance on Chinese rare-earth imports from 85% in 2009 to 58% by 2020. It did this through diversification (U.S. and Australian supply), magnet innovation (surface dysprosium reduction), and strategic stockpiling.

Those numbers broadly align with public trade data and industry reporting. Japan’s private sector—especially automakers—did act early. That is a fact, not spin.

Engineering Around Scarcity

Japan’s strength was technical adaptation. Reducing dysprosium loading in NdFeB magnets lowered exposure to the heavy rare earth supply risk. This is real industrial engineering, not diplomatic rhetoric.

But here is the harder truth: heavy rare earth separation remains overwhelmingly concentrated in China. That’s a fact—a decade-and-a-half later. Refining—not mining—is the choke point. The article correctly highlights environmental compliance costs as a structural barrier to ex-China refining capacity. That is a core _Rare Earth Exchanges_™ thesis.

Stockpiles Buy Time, Not Sovereignty

The commentary outlines mitigation strategies: stockpiling, recycling, substitution, marine mud extraction near Minami-Torishima, and alternative sourcing.

All technically valid. None are easy.

Recycling rare earths remains commercially marginal due to low concentration per device. The statistic often used is that about 1% of rare earth magnets are derived from recycled material.  Deep-sea mud projects are promising but capital-intensive and politically sensitive. Inventory buffers solve short-term shocks, not systemic dependence.

This is sober analysis—not hype.

Price Floors and Purchase Guarantees: Policy or Fantasy?

Tagami and Solis propose differentiated strategies:

• Market-complementing price floors for battery metals.
• Full-volume, time-bound government purchase guarantees for rare earths.

This is the most controversial claim. It is economically coherent but politically complex. Full-of-take guarantees imply state-backed industrial policy beyond normal market frameworks. Do ex-China nations have the political capital in their respective countries? This may be necessary for heavy rare earths, and the execution risk is enormous.

With an overall optimistic tone, the authors assume that allied governments can coordinate capital, trade rules, and shareholder expectations smoothly.

What’s Not Said Loudly Enough

Demand for rare earths is small in tonnage but critical in function. It’s a thinly traded market to say the least.  The strategic leverage lies in separation chemistry and refining scale. Without industrial-scale solvent extraction capacity outside China, diversification remains partial.

Japan reduced exposure. It did not eliminate it.

For investors and policymakers, the takeaway is clear: supply chain resilience requires engineering innovation, patient capital, and state-industry alignment. Diplomatic forums alone will not shift processing dominance.