In order to reduce the supply chain risks from the Chinese Communist Party (CCP), Japan is actively recycling and mining rare earth elements, while also promoting the development of rare earth-free magnets. Recently, Japan’s metal manufacturing giant Proterial is seeking to establish factories in markets such as North America to produce electric motor magnets that do not require heavy rare earth elements to meet customer demands.
Proterial, formerly known as Hitachi Metals, is planning a North American manufacturing facility, as revealed by its president Sean Stack in an interview with Nikkei News. Stack stated, “We are clearly focusing on North America and evaluating other regions that have been overly dependent on Chinese magnets in the past. Due to economic security and national security considerations, governments and businesses in these countries are looking for alternative supply chains.”
Currently, the company produces neodymium permanent magnets for electric motors in Japan and China, which typically require the addition of heavy rare earth elements such as dysprosium and terbium to enhance heat resistance.
Stack mentioned that the selection of the new plant site will take into account factors like local government subsidies. However, he admitted that magnets containing heavy rare earth elements still have performance advantages, and some customers are still willing to accept the role played by the CCP in their supply chain. He added, “If customers have such requirements, our factories also have the capability for dual-line production.”
In fact, in 2025, Proterial successfully developed a new type of neodymium magnet that does not require heavy rare earth elements and maintains high heat resistance, which has garnered significant attention from motor and electric vehicle manufacturers aiming to reduce or eliminate their reliance on Chinese rare earths.
Currently, Proterial has developed two rare earth-free magnets, one of which is already in production and shipping, while the other, a product with higher heat resistance, is expected to be available for delivery starting in April this year (2026).
The global supply of heavy rare earth elements is largely monopolized by the CCP, which often uses it as a geopolitical leverage, threatening to cut off supply. Currently, Japan relies on China for 60% to 70% of its rare earth imports.
Earlier, Japanese Prime Minister Sanae Takai stated that if the CCP takes any military action against Taiwan, it would impact Japan’s security and economy, necessitating a military response from Japan.
This statement has drawn strong dissatisfaction from the CCP. In January this year, the CCP announced tightened export controls on “dual-use” products to Japan, including rare earth resources. This move is expected to affect electric vehicle production and further accelerate the restructuring of supply chains by various companies worldwide.
To ensure stable rare earth supply and reduce reliance on the CCP, the Japanese government plans to start testing the recovery of rare earth elements from scrapped electric motors and other waste materials from the fiscal year 2026. Subsidies will be provided for rare earth recycling infrastructure (including transportation, storage, and testing equipment).
The Japanese Ministry of the Environment plans to allocate a budget of 6 billion yen (approximately $38.8 million) for material collection and storage equipment, as well as support for verifying the quality of the extracted rare earth. If the budget proposal passes the parliament vote, the related testing programs and subsidies could start as early as this summer, with recipients selected through public applications.
Apart from promoting recycling mechanisms, Japan is also actively seeking rare earth alternative solutions and mining locations. The Japanese government dispatched the deep-sea drilling vessel “Earth Explorer,” which successfully extracted rare earth-rich seabed mud from depths of 6,000 meters in early February.
This marks the first continuous rare earth mining attempt at such depths globally and is seen as a significant effort by Japan to strive for self-sufficiency in resources and break free from the CCP’s rare earth monopoly.