Introduction
Rare earth minerals play an important strategic role due to their industrial application in the transport, artificial intelligence, airspace, medical and defense sectors. Despite this, the rare earth supply chain remains heavily geographically concentrated, with China accounting for 60 percent of global mined production and 91 percent of global refined output as of 2024 (International Energy Agency, 2026). While this heavy production concentration in China’s favor long remained on the sidelines, the degree of Chinese control over the supply chain came to light in 2025 (Crebo-Rediker and Khan, 2026). In response to the Trump Administration’s tariffs and semiconductor export controls, Beijing imposed wide-spread export restrictions on rare earth elements (REEs), triggering supply chain disruptions in the United States, Europe and Japan, with the automotive industry being particularly affected (Baskaran and Schwartz, 2026).
The ongoing European green transition and digitalization is expected to lead to increased demand for REEs (Findeisen and Wernert, 2023), deepening the EU’s dependence on the Chinese-dominated minerals market. Currently, the EU imports 97 percent of its magnesium and 100 percent of its refined permanent magnets from China (European Commission, 2023). By recognizing the need for increased self-sufficiency in critical raw minerals, the European Commission implemented the European Critical Raw Minerals Act in March 2023 in response (Findeisen and Wernert, 2023). The Act aims to ensure that no more than 65 percent of the EU’s REE demand is sourced from a single third country and outlines steps to boost European mining, processing, refining and recycling capabilities (European Commission, 2023). According to this Act, by 2030, the EU should “extract at least 10 percent, process at least 40 percent and recycle at least 25 percent of its annual consumption of strategic raw materials” (Fina, 2026). However, despite ambitious benchmarks, many of the Act’s projects may struggle to deliver by 2030. An analysis by ODI Global points out that the 2030 benchmarks constitute cumulative targets for all REEs despite actual initiatives being skewed toward minerals such as lithium and graphite, while leaving dependencies on other materials unaddressed (Fina, 2026). Furthermore, the Act does not include any new funding from the EU budget and lacks resources to deliver new projects in third countries (Findeisen and Wernert, 2023), while almost fully relying on the extraction and processing of existing European supply rather than recycling and substitution (Fina, 2026).
Given the orientation of European legislation toward exploring domestic supply and uncertainty of meeting the 2030 targets, the EU can gain valuable lessons from its East Asian partners, Japan and South Korea. These two countries have routinely faced Chinese export controls and maintain a leading position in terms of REE supply chain strategy (Dickson and Kim, 2026), with their focus on public private partnerships, overseas investment and strategic raw material substitution.
Analysis
The Japanese case represents a successful example of diversification as Tokyo recognized the need to detach from Chinese REE supply chains following the 2010 Senkaku Islands dispute, during which the Japanese coastguard arrested a Chinese fishing boat captain for colliding with two coastguard ships (Terazawa, 2023). This resulted in China imposing a rare earth minerals embargo against Japan, thereby dealing a severe blow to the Japanese economy, which relied on China for 90 percent of REE exports at the time (Terazawa, 2023). In response, the Japanese government introduced a comprehensive package worth JPY 100 billion to enhance the resilience of its REE supply chain. The main pillars of the package included developing technologies and supporting investment to reduce the use of REEs, shifting towards alternative materials, promoting recycling and stockpiling (Terazawa, 2023), and investing in mining projects in Australia and Malaysia (JOGMEC, 2023). Consequently, Japanese reliance on Chinese REEs dropped from 90 percent to 60 percent over the course of thirteen years and Japanese consumption of rare earth minerals decreased by a half (Terazawa, 2023).
According to an analysis by the Observer Research Foundation, Seoul has been pursuing its own critical minerals strategy, formulated by the Ministry of Trade, Industry and Energy (MOTIE) in 2023. Similar to Japan, the strategy followed a 2022 Chinese export restriction on urea (a diesel additive and a fertilizer), which caused severe supply chain disruptions in South Korea . Since then the government has taken steps to reduce its dependence on China through private-public collaboration and developed a holistic plan to reduce mineral dependence across industrial sectors. MOTIE’s strategy aims to strengthen South Korea’s economic security and relies on four pillars: domestication, diversification, stockpiling and recycling. Using this strategy, Seoul aims to “reduce its dependence on China from 70 percent to 60 percent by 2027 and to 50 percent by 2030” (Sharma, 2026). To offer financial incentives for overseas investment and structured private-public consultations, South Korea established the Korea Mine Rehabilitation and Mineral Resources Corporation (KOMIR), offering support for overseas investments by providing loans, equity investment and a project coverage of up to 50 percent (Sharma, 2026). However, despite this, many state-led overseas investments suffered capital losses or were discontinued by governments following the Lee-myung Bak administration (2008-2013), leaving South Korea significantly more dependent on Chinese REEs than Japan, with an 87 percent neodymium import reliance and nearly 100 percent reliance on dysprosium oxide imports (The Chosun Daily, 2025).
Chinese export controls have pushed Tokyo and Seoul towards deepening bilateral cooperation as exemplified by the first high-level strategic dialogue on critical minerals held in Tokyo in 2025. During this dialogue, both countries agreed to strengthen bilateral cooperation in terms of mineral stockpiling and joint production, promote private-public partnerships and overseas investment (Japanese Ministry of Economy, Trade and Industry, 2025). This opens opportunities for Japan and South Korea to further strengthen their collective resilience vis-a-vis China while leveraging potential market synergies in critical industries, such as the EV battery sector where both countries possess significant capabilities (Dickson and Kim, 2026).
Policy recommendations
Given Europe’s focus on extraction and processing of a few key rare earth minerals rather than recycling and substitution, together with the lack of foreign investment initiatives in its Critical Raw Minerals Act, the EU should, similarly to Japan and South Korea:
- Develop technology to aid with REE use reduction and shift towards alternative materials.
- Set material-specific targets in the Critical Raw Minerals Act to cover all strategic REEs and thereby help reduce Europe’s total critical material dependence.
- Promote overseas investments initiatives and pursue private-public partnerships to benefit from extraction and processing beyond the European continent.
- Partner with like-minded allies (e.g., Japan, South Korea) to achieve collective supply chain resilience and leverage potential market synergies.
Bibliography
Baskaran, G. and Schwartz, M. (2026). Rare Earth Export Restrictions One Year Later. [online] Center for Strategic & International Studies. Available at: https://www.csis.org/analysis/rare-earth-export-restrictions-one-year-later. [Accessed 12 June 2026]
Chosun Daily (2025). Editorial: Japan’s Rare Earth Independence vs. South Korea’s ‘Resource Self-Harm’. [online] Chosun Daily. Available at: https://www.chosun.com/english/opinion-en/2025/10/11/3IKYO7Q4XNHKHB3O2F37AWGW4M/. [Accessed 20 June 2026]
Crebo-Rediker, H.E. and Khan, M. (2026). Leapfrogging China’s Critical Minerals Dominance. [online] Council on Foreign Relations . Available at: https://www.cfr.org/reports/leapfrogging-chinas-critical-minerals-dominance. [Accessed 12 June 2026]
Dickson, S. and Kim, Y. (2026). Leveraging U.S.-Japan-ROK Trilateralism for Critical Mineral Policy Cooperation. [online] Center for Strategic & International Studies . Available at: https://www.csis.org/blogs/new-perspectives-asia/leveraging-us-japan-rok-trilateralism-critical-mineral-policy [Accessed 20 June 2026]
European Commission. (2024). European Critical Raw Materials Act. [online] European Commission. Available at: https://commission.europa.eu/topics/competitiveness/green-deal-industrial-plan/european-critical-raw-materials-act_en. [Accessed 13 June 2026]
Fina, D. (2026). Europe’s critical raw materials bet: a reality check on the EU’s ambitions. [online] ODI Global . Available at: https://odi.org/en/insights/europes-critical-raw-materials-bet-a-reality-check-on-the-eus-ambitions/ [Accessed 20 June 2026]
Findeisen, F. and Wernert, Y. (2023). Meeting the costs of resilience: The EU’s Critical Raw Materials Strategy must go the extra kilometer. [online] Jacques Delors Centre. Available at: https://www.delorscentre.eu/en/publications/eu-critical-raw-materials. [Accessed 13 June 2026]
International Energy Agency (2024). Rare earth elements – Analysis. [online] International Energy Agency . Available at: https://www.iea.org/reports/rare-earth-elements. [Accessed 12 June 2026]
Japan Organization for Metals and Energy Security (2022). Securing Supply of Heavy Rare Earths to Japan with Additional Investment to Lynas : 2022 News Releases. [online] Japan Organization for Metals and Energy Security [JOGMEC]. Available at: https://www.jogmec.go.jp/english/news/release/release_00228.html. [Accessed 20 June 2026]
Ministry of Economy, Trade and Industry (2025). First Japan-Korea High Level Dialogue in the Field of Critical Minerals Held. [online] Ministry of Economy, Trade and Industry. Available at: https://www.meti.go.jp/english/press/2025/0227_002.html [Accessed 21 June 2026]
Sharma, A. (2026). The Policy Edge of Japan and South Korea in Securing Critical Minerals. [online] Observer Research Foundation . Available at: https://www.orfonline.org/research/the-policy-edge-of-japan-and-south-korea-in-securing-critical-minerals. [Accessed 18 June 2026]
Tatsuya Terazawa (2023). How Japan solved its rare earth minerals dependency issue. [online] World Economic Forum. Available at: https://www.weforum.org/stories/2023/10/japan-rare-earth-minerals/. [Accessed 19 June 2026]