China’s rare earths curbs extend pressure on supply to Japan

China has abruptly halted shipments of critical heavy rare earth elements, terbium oxide and dysprosium oxide, to Japan since November 2025, effectively cutting off essential inputs for Tokyo's high-tech manufacturing sector. This sustained embargo, confirmed by Chinese customs data, underscores Beijing's increasing willingness to wield its dominance in strategic minerals as a potent geopolitical lever, deepening supply chain anxieties for Japan and global industries reliant on these irreplaceable materials. The roots of this latest restriction trace back to a diplomatic dispute over Taiwan-related statements by Japanese Prime Minister Sanae Takaichi in November 2025, intensifying earlier Chinese export control measures on rare earths initiated in April 2025 and further tightened in January and February 2026. Terbium and dysprosium are indispensable for high-performance permanent magnets, vital components in everything from electric vehicle motors and wind turbines to defense systems. With China controlling 98-99% of the global supply of separated heavy rare earth elements, Japan, home to the largest rare earth magnet manufacturing base outside China, faces immense pressure to secure alternative sources amidst escalating geopolitical tensions and a global push for supply chain resilience. In response, Japan is aggressively accelerating its supply chain diversification efforts, including plans by Shin-Etsu Chemical to construct a new domestic rare earth refining facility and government-led initiatives to explore new mining opportunities in places like Greenland. These moves align with broader G7 commitments to reduce dependence on any single supplier for critical minerals to below 60% by 2030, but the immediate future suggests continued bottlenecks and heightened price volatility for heavy rare earths, with terbium already seeing significant price surges in June 2026. Manufacturers globally must brace for sustained disruption and strategically reassess their reliance on concentrated rare earth supplies.