By Satoshi Sugiyama and Hina Suzuki <\/p>\n
TOKYO, July 7 (Reuters) – A shortage of critical minerals is starting to affect the broader Japanese economy, adding a sense of urgency for Prime Minister Sanae Takaichi’s government to find alternatives to exports that China has cut off, according to recent corporate filings. <\/p>\n
China dominates the global market for rare \u200cearths – which are crucial in making items from electric cars to weapons – and it is using those supplies as a diplomatic cudgel. <\/p>\n
Since Takaichi enraged Beijing with comments about \u200cdefending Taiwan in November, Beijing has choked off shipments of certain key minerals to Japan. <\/p>\n
Recent surges in the Nikkei stock index to successive records and buoyant corporate sentiment in the Bank of Japan’s Tankan survey point to an economy \u200bon an upswing. But an unprecedented increase in corporate Japan’s notices about critical minerals is flashing a warning signal for the quarters ahead. <\/p>\n
Japan’s economy took a hit to the tune of about 0.9% of GDP in 2010 during a bout of trade restrictions by China, but the effect could be worse this time around now that rare earths have grown in importance in a variety of supply chains, said Takeshi Higashifukasawa, chief economist at Mizuho Research Institute. <\/p>\n
“With the development of AI, rare earths are being used across a broad range of goods and throughout supply chains,” Higashifukasawa said, noting that electric vehicles have \u200centered the fray since then. “Companies cannot afford to be optimistic.” <\/p>\n
Chinese customs \u2060data last month showed there were no exports to Japan of terbium or dysprosium oxide from November through May and minuscule shipments of yttrium oxide since December, cutting off supplies critical to making powerful magnets. <\/p>\n
Regular filings to the Tokyo Stock Exchange over the past decade typically had fewer than 40 \u2060mentions of rare earths per month, with most concentrated in the materials and industrial sectors. But such notices have doubled since May and are now increasingly cited as risks by consumer and electronics firms. <\/p>\n
More than two-thirds of nearly 200 filings in May and June that mentioned rare earths said export controls were affecting their business negatively or could do so in the future. <\/p>\n
“Should restrictions on the export of rare earths or similar \u200bmeasures \u200bpersist for an extended period, this could affect the group’s production activities and financial performance,” watchmaker Citizen Watch \u200bsaid in one such warning on June 23. <\/p>\n
In response to Reuters questions, \u200cCitizen Watch said rare earths are mainly used in motors, but they had not affected production or earnings, adding it did not currently expect to revise earnings forecasts because of rare-earth-related supply risks or China’s export controls. <\/p>\n
Omron, a maker of medical devices, cited on June 22 China’s export restrictions on rare earths as part of its broader assessment of geopolitical risks, alongside conflicts in Ukraine and the Middle East. However, the impact of China’s export controls on production and earnings was not significant at present, the company said, adding it does not procure rare earths directly, though some purchased components contain materials that use them. <\/p>\n
While the pain is not being evenly felt across industries, it is spreading, said Satoru Yoshida, a commodities analyst at Rakuten Securities, attributing the divergence to how \u200cmuch supply companies built up before Beijing tightened the screws. <\/p>\n
“Supply is being restricted, but everyone is starting to \u200buse them – and that only makes them even rarer,” Yoshida said, adding that China controlled roughly 70% of rare \u200bearth production and 60% of reserves as of 2025. <\/p>\n
SUPPLY SEARCH <\/p>\n
Tokyo has been racing to \u200bline up alternatives. In a statement, Japan’s industry ministry said it is using investments and subsidies to work with allies and companies to secure stable supplies \u200cof rare earths and other critical minerals. <\/p>\n
Takaichi signed a framework with U.S. \u200bPresident Donald Trump in October to coordinate on critical \u200bminerals and rare earths, including joint stockpiling and rapid-response supply arrangements. And the two governments have discussed joint development of deep-sea deposits; commercial-scale output, however, remains years away. <\/p>\n
Takaichi is also banking on a plan agreed to by Group of Seven nations in June to step up coordination of stockpiles, and Japan has also begun some rare-earth recycling projects. <\/p>\n
But \u200bwhen those efforts will come online and how much they can yield \u200cremain unclear, said Yuriy Humber, CEO of Tokyo-based Yuri Group, a consultancy. <\/p>\n
“I assume that a year of export restrictions will create big problems and we’re four to \u200bfive months into that,” Humber said. “Obviously, the government wants to keep the issue under wraps so as not to cause panic and give China the early win.” <\/p>\n
(Reporting \u200bby Satoshi Sugiyama and Hina Suzuki in Tokyo; Writing by Rocky Swift; Editing by Thomas Derpinghaus) <\/p>\n","protected":false},"excerpt":{"rendered":"By Satoshi Sugiyama and Hina Suzuki TOKYO, July 7 (Reuters) – A shortage of critical minerals is starting…\n","protected":false},"author":2,"featured_media":54473,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[174],"tags":[1300,12,36145,8526,191,189,3343,8,188,190,1955,358,36146,5923],"class_list":["post-54472","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-bank-of-japan","tag-china","tag-corporate-filings","tag-critical-minerals","tag-economy","tag-economy-of-japan","tag-export-controls","tag-japan","tag-japans-economy","tag-japanese-economy","tag-rare-earths","tag-sanae-takaichi","tag-takeshi-higashifukasawa","tag-tokyo-stock-exchange"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/54472","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/comments?post=54472"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/54472\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media\/54473"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media?parent=54472"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/categories?post=54472"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/tags?post=54472"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}