Japanese prime minister Sanae Takaichi and US president Donald Trump have agreed to collaborate on ensuring a stable supply of rare earths and other critical minerals, particularly by ramping up investments in selected projects to strengthen supply chains.
Takaichi and Trump signed the framework agreement in Tokyo on 28 October, as both leaders aim to secure raw and processed critical minerals, as well as rare earths, essential for the production of advanced technologies and the support of domestic industries. They also aim to identify projects of interest to address gaps in supply chains covering mining, separation and processing, assuming derivative products such as permanent magnets, batteries, catalysts and optical materials.
Tokyo and Washington intend to take measures to provide financial support to selected projects to generate end-products for delivery to buyers in Japan and the US, as well as like-minded countries as appropriate, within six months of the deal. They will mobilise government and private sector support through grants, guarantees, loans, equity, offtake arrangements, insurance, or regulatory facilitation.
The common framework could also cover Japan-US commitment to investing in minerals recycling technologies and managing critical minerals and rare earth scrap that supports supply chain diversification. Japan and the US will work together to consider mutually complementary stockpiling, based on existing national systems and in accordance with each country's regulations, while aiming to address non-market policies and unfair trade practices.
The latest deal is aimed at mitigating security concerns, given China's domination over the global rare earths market and its export controls amid geopolitical pressure from the US. Senior US and Chinese officials said on 26 October that they had reached a broad consensus on resolving recent trade tensions, with Washington no longer considering imposing a 100pc tariff on Chinese goods and Beijing possibly delaying a scheduled 24 percentage point increase in reciprocal tariffs scheduled to take effect on 10 November. Further details may be announced following a summit meeting between Trump and Chinese president Xi Jinping scheduled on 30 October in South Korea.
Japan relies on foreign deliveries of rare earths. Tokyo is determined to diversify its supply resources given that China has been strengthening its control of the entire rare earths supply chain. Japan could cover its demand for light rare earths from non-Chinese sources such as Australia, Malaysia and the US. But the diversification for heavy rare earths has proved difficult for now, partly because of slow development outside China.
But Tokyo will work on reinforcing supply chains of rare earth, such as buying from like-minded countries even at higher prices, not sticking to imports from a country with the lowest prices, Japan's trade and industry minister Ryosei Akazawa, who was previously in charge of Tokyo-Wahington tariff negotiations, said on 27 October. Japan currently depends on a "particular country" for some non-ferrous metal products, which are used as raw materials to produce items such as permanent magnets, he said, adding that permanent magnet production supports Japan's economic growth.
This US-Japan agreement is the fourth critical mineral agreement that the US government signed with Asia-Pacific partners since China tightened export controls on rare earth elements on 9 October. Trump and Australia's prime minister Anthony Albanese signed an agreement on 20 October to co-invest at least $1bn each in critical mineral projects over the next six months. On 26 October, the US signed two deals with Thailand and Malaysia to co-operate on diversifying critical mineral supply chains.
These deals cover the entire supply chain. Australia is home to several rare earth mining projects, Malaysia is an established rare earth product supplier outside of China and Japan is the second-largest permanent magnet producer after China. But whether these deals can truly help the US to significantly reduce reliance on Chinese material remain uncertain as full details of these deals were not immediately available.
