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Japan Is Running Dry on Strategic Metals. Here's Who Is Stepping Up to Fill the Gap

China has shipped Japan almost no yttrium this year and cut off tungsten, dysprosium and terbium. Tokyo is putting money into a short list of non-Chinese suppliers, and a few juniors are on it.

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Japan Is Running Dry on Strategic Metals. Here's Who Is Stepping Up to Fill the Gap

Eighteen tonnes. That is how much yttrium oxide China shipped to Japan in the first nine months of 2026, according to Chinese customs data reported by SMM and XLB News, down from 888 tonnes a year earlier. That is a 98% drop, for a metal most people have never heard of and Japan's factories can't do without. Yttrium coats turbine blades in jet engines and gas-fired power plants and is used in chipmaking, and Japan was the largest buyer of Chinese yttrium in 2025, according to US Geological Survey data cited by The Oregon Group.

Yttrium is only the sharpest cut. China added yttrium and six other rare earths to its export licensing list in April 2025, then tightened curbs on dual-use shipments to Japan in January 2026. In the first half of this year, China's exports to Japan of those seven controlled rare earths fell 51%, against a 16% decline for the world as a whole, according to customs data reported by Nikkei. Reuters reported zero June shipments of dysprosium, terbium and yttrium to Japan, and September volumes of dysprosium and terbium remained negligible. Tungsten shipments to Japan stopped in February, according to an analysis by Jing Ge for 9DASHLINE. Sumitomo Electric president Osamu Inoue said in May that procurement from China had "completely stopped," as quoted in that analysis.

The price signal is loud. Outside China, yttrium oxide now costs about US$1,150 per kilogram against roughly US$9 inside China, according to Argus data cited by the Financial Times, a gap of more than 125 times. Sumitomo Electric has raised prices on some cutting tools by up to 60%, and Mitsubishi Materials more than tripled prices on some tungsten materials from June, per 9DASHLINE. One Japanese government official told the FT bluntly: "The timeline is not years, it's months."

There is a twist that should worry Tokyo even more. China is still happily selling Japan the finished product. Exports of rare earth magnets to Japan reached about 1,564 tonnes from January to September, only 4% below last year, according to the same customs data. Japanese magnet makers that can't get the heavy rare earths to make their own magnets risk losing ground to Chinese competitors that can. Because Japan turns raw metals into the magnets, coatings, wafers and cutting tools that end up in Western engines and defence systems, a squeeze on Tokyo is also a squeeze on its allies.

So who is stepping up? The benchmark remains Lynas Rare Earths Ltd. (ASX: LYC; OTC: LYSCF), which agreed in March to make 75% of its heavy rare earth oxides available to Japanese industry until 2038. The catch is timing: Lynas is not expected to produce yttrium until early 2028. Trading house Sojitz Corp. (TSE: 2768), which runs a joint venture with state agency JOGMEC, has said it will add yttrium to the elements it imports, sourcing it from Malaysia, according to Nikkei Asia.

The most direct junior bet on Japan's heavy rare earth problem is Namibia Critical Metals Inc. (TSXV: NMI; OTCQB: NMREF). Its Lofdal project in Namibia is described by the company as one of the largest known undeveloped sources of dysprosium, terbium and yttrium, the exact trio China has stopped sending to Japan. JOGMEC and Toyota Tsusho Corp. (TSE: 8015) have completed a C$23 million earn-in for a 50% interest, pending shareholder and regulatory approvals, including final TSX Venture Exchange acceptance. JOGMEC has committed up to C$47.7 million (about ¥5.5 billion) to the Japanese joint venture vehicle, holds a first right of refusal to fully fund Lofdal through to commercial production, and has the right to buy all of its output at market prices. About C$11 million of the earn-in went toward an expanded definitive feasibility study. President and CEO Darrin Campbell said Toyota Tsusho "has formally joined the partnership." In mid-October, the company said the consent process could take up to another 30 days.

Tungsten has its own candidates. Tivan Ltd. (ASX: TVN) signed a non-binding, exclusive memorandum of understanding with Sumitomo Corp. (TSE: 8053) in June for its Molyhil tungsten project in Australia's Northern Territory. Under the MOU, Sumitomo could invest up to $25 million for as much as 8.75% of the project joint venture and take up to 100% of life-of-mine production, according to SmallCaps. Molyhil's April scoping study showed a pre-tax NPV (8%) of $534.3 million and a 114.2% IRR. Elsewhere, Sojitz signed a non-binding MOU in November to buy about 5% of Vietnam's Masan High-Tech Materials (UPCoM: MSR), which operates the Nui Phao tungsten mine, and to distribute its tungsten in Japan, according to a Masan statement reported by Reuters.

Canada wants in too. In June, International Trade Minister Maninder Sidhu led about 300 delegates to Tokyo to discuss joint mining projects, offtake deals and joint stockpiling of metals including gallium, according to Reuters. "We're offering Japan that avenue," Sidhu said. Japan is also trying to dig its way out at home: the drill ship Chikyu brought rare earth-rich mud up from nearly 6,000 metres off Minamitorishima in February, though the government has set no timeline for commercial production, according to the Associated Press.

Now the reality check. Most of these alternatives are years from delivering meaningful tonnes. Lofdal is still at the feasibility stage, its 50% sale to Japanese partners is not yet final, and recent releases give no updated resource or economic figures. A large future funding requirement could also dilute Namibia Critical Metals' share of the project. Tivan's Sumitomo deal is non-binding, Molyhil's numbers come from a scoping study, the lowest level of economic analysis, and binding agreements were targeted for the third quarter. Processing heavy rare earths outside China remains thin, prices outside China are high but volatile, and any easing in Beijing's licensing, which China's commerce ministry is due to review around November 15, could take the air out of the premium quickly.

Still, the pattern is hard to miss. Japan's strategy is to buy into supply before it exists, and its agencies and trading houses are writing cheques into juniors that hold the right metals in the right jurisdictions. For investors, the lesson is to follow the yen: the juniors with a Japanese partner already in the room are the ones best placed to fill the gap.

Sources

Disclaimer

Neither the author of this article nor JuniorStocks holds equity, stock options, or any other financial positions in Namibia Critical Metals Inc. (TSXV: NMI; OTCQB: NMREF), Tivan Ltd. (ASX: TVN) or any other companies mentioned in this publication. This content is published by JuniorStocks strictly for informational purposes, was prepared independently without company compensation, and utilized AI assistance for text editing, formatting, and generating accompanying media. While Japan's scramble for non-Chinese strategic metals represents a compelling growth story, this article does not constitute investment or financial advice. Investors are strongly advised to conduct their own thorough, independent due diligence and consult with a qualified financial professional before making any investment decisions.

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