Tackling China’s Rare Earth Choke

Source: The post “Tackling China’s Rare Earth Choke” has been created, based on “Tackling China’s Rare Earth Choke” published in “Indian Express” on 13 November 2025.

UPSC Syllabus: GS Paper -3- Economic Development, Science & Technology, Environment, Security

Context: China currently controls around 60–65% of global rare earth production and almost 90% of global refining capacity, giving it strategic leverage over critical supply chains. After facing an export ban from China in 2010, Japan adopted a comprehensive plan to diversify its rare earth sources, develop alternative technologies, and ensure long-term supply security. asure Japan’s approach has now become a model for other nations seeking to reduce their dependency on Chinese rare earth supplies.

Background – China’s Rare Earth Monopoly

1. In September 2010, a collision between a Chinese fishing vessel and a Japanese coast guard ship near the East China Sea led China to suspend rare earth exports to Japan.
2. This incident revealed Japan’s extreme vulnerability, as it relied on China for nearly 90% of its rare earth imports.
3. The move demonstrated how China could use its mineral dominance as a geopolitical weapon.

Japan’s Counter Strategy

1. Diversification of Supply Sources: Japan entered into partnerships with Australia, Vietnam, India, and African nations to develop alternate mining and processing capabilities.
2. Government Investment: The Japanese government agency JOGMEC (Japan Oil, Gas and Metals National Corporation) financed overseas mining projects to secure long-term supply.
3. Recycling and Substitution: Japan promoted recycling technologies and invested heavily in research to find substitutes for rare earth elements in manufacturing.
4. Strategic Stockpiling: Japan built national reserves of critical minerals to prevent disruptions in industrial production.
5. Public–Private Coordination: Japan’s strategy involved close coordination between the government, industries, and research institutions, ensuring policy alignment and effective execution.
6. International Cooperation: Japan worked with like-minded countries to promote transparent and sustainable global supply chains for rare earths.

Achievements of Japan’s Approach

1. Japan successfully reduced its dependence on China for rare earth imports from about 90% in 2010 to nearly 60% by 2023.
2. The country invested over $1 billion in global mining projects and developed advanced recycling systems.
3. Japanese industries such as Toyota and Hitachi began using rare earth-free or low-use technologies, minimizing supply risks.
4. Japan’s rare earth policy became a benchmark for strategic self-reliance and industrial resilience.

Challenges

1. High Extraction and Refining Costs: Rare earth processing is expensive and requires advanced technology, making it difficult for many nations to compete with China’s low-cost dominance.
2. Environmental Concerns: The mining and refining of rare earths produce toxic waste, creating ecological and social challenges that restrict expansion.
3. Limited Technological Capacity: Many countries, including India, lack cutting-edge refining technologies and face a shortage of skilled technical manpower.
4. Long Gestation Period: Developing new mines, processing plants, and recycling networks takes years of sustained investment.
5. Global Market Dependence: China continues to dominate downstream manufacturing and price-setting mechanisms, which discourages competition.
6. Institutional Hurdles in India: India’s bureaucratic delays, limited private participation, and outdated mining laws hinder rapid progress in the rare earth sector.

India’s Exposure

1. India imported around 2,270 tonnes of rare earths in 2023–24, marking a 29% increase compared to 2019–20.
2. Approximately 65% of India’s rare earth imports come from China, making the country vulnerable to potential supply disruptions.
3. The rapid expansion of EV, renewable energy, and defense industries in India will significantly increase demand for rare earths in the coming years.

Way Forward

1. Diversify Import Sources: India should expand partnerships with Australia, Vietnam, the U.S., and African nations for joint exploration and mining.
2. Strengthen Domestic Capabilities: Agencies like IREL (India) Ltd. and the Atomic Minerals Directorate must be empowered to enhance exploration, processing, and value addition.
3. Promote Recycling and Urban Mining: India should establish e-waste recycling hubs and promote rare earth recovery technologies.
4. Create Strategic Mineral Reserves: The government should maintain national stockpiles of essential rare earths for critical industries.
5. Ensure Policy Integration: Rare earth policy should align with the National Mineral Policy and Atmanirbhar Bharat initiatives to promote private sector participation.
6. Foster International Cooperation: India can lead a Rare Earth Partnership Framework with Quad and ASEAN countries to reduce collective dependence on China.
7. Invest in R&D: Long-term investment in green extraction technologies and RE-free alternatives should be prioritized.

Conclusion: Japan’s rare earth strategy demonstrates that diversification, innovation, and recycling can effectively counter resource monopolies. Although challenges remain, Japan’s experience proves that strategic planning, policy consistency, and international cooperation can ensure mineral security and economic resilience. For India, adopting similar long-term strategies is essential to achieve technological sovereignty and supply chain independence in critical minerals.

Question: How can Japan’s strategy to counter China’s rare earths dominance serve as a model for other nations, including India? Discuss the challenges involved.