Japanese trading company Sojitz has begun exploring Southeast Asia and India for new sources of rare earth elements, a strategic move to secure supply chains for critical materials away from China.
This decision was directly triggered by recent market shocks. First, in April 2026, China Northern Rare Earth, a major producer, increased its benchmark price for rare earth concentrate by about 45%. This sharp price hike signaled tighter upstream conditions in China and created a powerful incentive for Japanese companies to find more stable and affordable sources elsewhere. The rising prices also improved the financial viability of developing new mines, making Sojitz's exploration efforts more bankable.
However, this move was only possible because of careful groundwork laid over several months. In March 2026, a Japan-Australia joint venture involving Sojitz, known as JARE, renewed a crucial long-term contract with Australian producer Lynas Rare Earths. This deal secured a stable volume of key rare earths like NdPr through 2038 and established a price floor, effectively creating a safety net against market volatility. This contractual certainty gave Sojitz the confidence to invest in exploring new, higher-risk regions.
Zooming out, this entire strategy is unfolding against the backdrop of the broader U.S.-China geopolitical rivalry. In late 2023, China banned the export of technologies for extracting and processing rare earths, reinforcing its dominance and highlighting the strategic vulnerability of countries like Japan. In response, Japan and the U.S. have strengthened their alliance on critical minerals, creating a policy framework that supports and encourages companies like Sojitz to diversify their supply chains.
Of course, this path is not without challenges. The target regions, such as Laos and Vietnam, are rich in valuable heavy rare earths but also present significant environmental and social governance (ESG) risks. Past environmental incidents in Laos have led to stricter regulations. This explains why Sojitz has stated it will only pursue “carefully scrutinized” projects, balancing the strategic need for diversification with its commitment to responsible sourcing.
- Rare Earth Elements (REEs): A group of 17 metallic elements crucial for high-tech products like electric vehicles, wind turbines, and advanced electronics.
- NdPr: Neodymium-Praseodymium, a rare earth alloy essential for making the world's strongest permanent magnets used in EV motors and other high-performance applications.
- JARE (Japan Australia Rare Earths B.V.): A joint venture between Japan's Sojitz Corporation and JOGMEC, established to secure a stable, long-term supply of rare earths for Japanese industry.