US, Japan to Forge Critical Minerals Alliance, Targeting Rare Earths, Lithium, and Copper to Counter China

The U.S. and Japan are set to sign a landmark agreement to jointly develop critical minerals, aiming to build a stable supply chain independent of China.

This partnership is driven by key factors, including China's export controls and U.S. electric vehicle tax credit rules (FEOC), which incentivize sourcing from allied nations.

The agreement will be put into action through specific projects in the U.S. and joint research on deep-ocean resources, solidifying economic security cooperation.

The United States and Japan are formalizing a major partnership to secure critical minerals like rare earths, lithium, and copper.

This agreement, set to be announced at the Washington summit, is a strategic move to build a reliable supply chain that is not dependent on China. It's the culmination of many smaller steps and policy shifts over the past couple of years, driven by a shared sense of urgency to de-risk the supply of materials essential for modern technology, from electric vehicles (EVs) to advanced electronics.

So, what set the stage for this alliance? There are a few key drivers. First, China's decision in 2025 to tighten export controls on rare earths and magnet technologies sent a clear signal to the world about its dominance and willingness to use it as leverage. This created a strong incentive for countries like the U.S. and Japan to find alternative, secure sources.

Second, U.S. policy has been actively steering manufacturers away from China. The FEOC (Foreign Entity of Concern) rules, finalized in 2024, are a powerful tool. They stipulate that starting in 2025, EVs containing critical minerals from Chinese entities become ineligible for significant consumer tax credits. This policy directly creates market demand for minerals sourced from the U.S. or its allies, making a U.S.-Japan partnership highly valuable.

Furthermore, this isn't just about policy; tangible investments have paved the way. A great example is the joint venture between Japan's Mitsubishi and Canada's Hudbay for the Copper World project in Arizona. This move, where Japanese capital funds a major U.S. copper mine, serves as a perfect model for the kind of cooperation the summit aims to scale up. Similarly, Japan’s recent success in a world-first test to retrieve rare-earth mud from the deep seabed near Minamitorishima island makes the agreement's goal of jointly exploring these resources a credible, near-term possibility.

Ultimately, this U.S.-Japan accord is more than just a diplomatic handshake. It strategically connects policy incentives, corporate investment, and technological innovation to build a resilient and allied supply chain for the 21st century.

Glossary
FEOC (Foreign Entity of Concern): A U.S. government designation for companies controlled by or subject to the jurisdiction of a foreign adversary, such as China. The designation restricts these entities from benefiting from certain U.S. federal funding and tax credits, particularly in the EV supply chain.
Rare Earths: A set of seventeen metallic elements essential for manufacturing high-tech products, including powerful magnets used in EV motors and wind turbines, as well as consumer electronics.
Minamitorishima: A remote Japanese atoll in the Pacific Ocean. In the nearby seabed, one of the world's largest deposits of rare-earth metals has been discovered, representing a significant potential future resource.

US, Japan to Forge Critical Minerals Alliance, Targeting Rare Earths, Lithium, and Copper to Counter China

The U.S. and Japan are set to sign a landmark agreement to jointly develop critical minerals, aiming to build a stable supply chain independent of China.

This partnership is driven by key factors, including China's export controls and U.S. electric vehicle tax credit rules (FEOC), which incentivize sourcing from allied nations.

The agreement will be put into action through specific projects in the U.S. and joint research on deep-ocean resources, solidifying economic security cooperation.

The United States and Japan are formalizing a major partnership to secure critical minerals like rare earths, lithium, and copper.

Glossary
FEOC (Foreign Entity of Concern): A U.S. government designation for companies controlled by or subject to the jurisdiction of a foreign adversary, such as China. The designation restricts these entities from benefiting from certain U.S. federal funding and tax credits, particularly in the EV supply chain.
Rare Earths: A set of seventeen metallic elements essential for manufacturing high-tech products, including powerful magnets used in EV motors and wind turbines, as well as consumer electronics.
Minamitorishima: A remote Japanese atoll in the Pacific Ocean. In the nearby seabed, one of the world's largest deposits of rare-earth metals has been discovered, representing a significant potential future resource.