According to a report by the Japan Economic News website on August 18th, it has become increasingly difficult to obtain rare earth materials for electric vehicles (EVs) and semiconductor manufacturing equipment in Japan. Due to Japan's export controls imposed by China, the main producer of these materials, imports during the first half of 2026 are only about 20% of the levels before the controls were implemented, compared to the same period in 2024.
The alternative procurement from regions outside China, such as Vietnam and the United States, is progressing slowly. The current situation is that if China's export controls continue, the impact on Japanese companies' production activities will be unavoidable.
According to trade statistics released by the Japanese Ministry of Finance, the Japan Economic News investigated the trends in the import of rare earths in Japan.
The survey targets two categories: “dysprosium alloy” and “yttrium oxide”. Dysprosium is highly scarce among rare earths and is a essential raw material for dysprosium magnets used in electric vehicles and hybrid vehicles. Yttrium, on the other hand, is used as a raw material for coatings in semiconductor manufacturing equipment.
The import volume of dysprosium in Japan from January to June 2026 was 13 tons, which is a significant decrease of 82% compared to the period from January to June 2024 before China’s export controls were implemented. Specifically, imports from China were zero in April, May, and June 2026, having a huge impact. During the same period, the import volume of yttrium dropped to 204 tons, representing a year-on-year decrease of 74%.
China accounts for 70% of the world's rare earth mining output, with its magnetic rare earth production exceeding 90% of the global total. By virtue of its monopoly over rare earth supply, China is continuously exerting economic pressure on other countries.
In April 2025, the Chinese Ministry of Commerce restricted the export of seven rare earths, including dysprosium and yttrium. Starting from February 2026, in accordance with the export control regulations for dual-use items, 20 Japanese companies and institutions were included in the list of entities subject to export control for important minerals such as rare earths. By the end of June, another 20 companies and institutions were added to this list.
To ensure alternative procurement sources for China, Japan is accelerating resource development and network establishment in regions outside of China.
From January to June 2026, besides China, Japan also imported yttrium from 12 countries and regions, including the United States and Australia (compared to 3 countries and regions from January to June 2024). During the same period, dysprosium was also imported from Vietnam, but sufficient quantities were not obtained.
Japanese Prime Minister Koichi Kaishira issued instructions in late June regarding the seabed rare earth development project in the waters off Minamitoro Island in the Ogasawara Islands. She requested that the verification of the industrial scale be initiated by 2027. Dourijin Corporation is also striving to cooperate with Australian resource giant Lynas to develop new mines in Southeast Asia. However, in reality, aside from requesting China to resume exports, Japan currently has no other immediate measures to take.
In 2010, when Sino-Japanese relations were at a tense state, the risk of relying on China for rare earths became apparent. As relations deteriorated, imports from China dropped sharply in 2012.
The situation is even more severe. The minimum amount of yttrium imported from China was 235 tons from January to June 2013. However, the import volume for January to June 2026 (204 tons) has fallen below this level, reaching a historical low.
Japanese companies' activities are also beginning to be affected. Mitsui Steel established a business base dealing with rare metals in Liaoning Province, northeastern China, in April 2026. However, President Ikemasa Ise said, "Under the current circumstances, if things deteriorate further, closing this base could become an option to consider."
Mitsui Metal originally planned to produce rare earth materials used in semiconductor manufacturing equipment at its factory in Fukuoka Prefecture, with yttrium as the main focus. These materials were then intended to be exported to China, with sales conducted through newly established outlets. However, due to the inability to obtain sufficient yttrium raw materials from China, there is currently no capacity available for exports.
The rare-earth magnet giant Proterial Corporation (formerly Hitachi Metal) has also stopped importing dysprosium from China. Until November 2025, some rare-earths could still be exported, but by July, it was completely impossible to obtain any export permits.
In the face of slow progress in alternative procurement, Japanese companies can only gradually use their inventory to barely maintain supplies to their major customers. A large Japanese materials company involved in rare earths said, "The situation is very serious due to the cessation of imports from China."
Japanese company AGC is involved in coating processes that use yttrium to improve the durability of components used in semiconductor manufacturing equipment. The company states that “current production has not been affected yet.” On the other hand, it plans to evaluate the performance of alternative materials and purchase them from regions outside China.
Reports suggest that there is no sign of improvement in Sino-Japanese relations. In May, China detained two Japanese employees of the Fujitec Group in Dalian, Liaoning Province, and arrested them in June. The details of the incident are unclear, but it is believed that they were involved in illegally exporting rare earth magnets, which are subject to control for both military and civilian use.
A Japanese semiconductor equipment manufacturing company executive stated that "there is currently no significant bottleneck in production," and the impact on the supply chain's downstream remains relatively limited.
However, Japan’s major materials and non-ferrous metal companies also have limited reserves of rare earths. If China’s export controls continue, it will surely affect the production activities of Japan’s main manufacturing industries.
The Chinese Ministry of Foreign Affairs has repeatedly emphasized that China, in accordance with laws and regulations, prohibits the export of all dual-use items to Japanese military users and for military purposes. The purpose is to prevent Japan from becoming militarized again and pursuing nuclear ambitions. China's stance on maintaining the stability and security of the global supply chain for key minerals remains unchanged.
