The chemical company and magnet manufacturer aims to expand its processing capacity for terbium, dysprosium, and yttrium. The announcement comes at a time when Japan is increasingly facing restrictions on access to critical raw materials from China.
According to media reports, Japanese chemical company Shin-Etsu is planning a new rare earth refinery in Fukui Prefecture. The company is one of the leading manufacturers of rare earth permanent magnets outside China. It is also among the few non-Chinese players that cover large parts of the value chain.
As reported by Nikkei Asia, the project will involve an investment of approximately $218 million, half of which will be funded through government subsidies. Shin-Etsu already operates two rare earth refineries in the region, Nikkei added. The new facility will focus on dysprosium, terbium, and yttrium, elements that are in high demand for a range of high-tech applications. At the same time, they are among the seven rare earth elements that China placed under strict export controls last year, further tightening an already challenging supply situation.
Japan has been particularly affected by these restrictions. In January, China imposed additional export controls on Japan covering so-called dual-use goods, citing their potential military applications. The measures also apply to critical raw materials, including several rare earth elements.
Japan Seen as a Model for Resilient Supply Chains — With Limits
Against this backdrop, Shin-Etsu’s announcement can be seen as part of Japan’s broader efforts to reduce its still significant dependence on China for both raw materials and downstream processing. In recent months, Tokyo has intensified these efforts. Japan has long been regarded as a pioneer in building resilient raw material supply chains. The catalyst was a diplomatic dispute in 2010, when China temporarily restricted rare earth exports to Japan. Some observers see parallels between that episode and the current situation.
Nevertheless, a rapid end to import dependence appears unlikely. Competing with China remains difficult. Rare earth refining costs in China are still significantly lower than in Japan, Nikkei quoted Yoshikiyo Shimamine, Chief Economist at the Dai-ichi Life Research Institute in Tokyo, as saying. Rather than competing directly on price, Japan is likely to focus on building a supply chain capable of generating sufficient demand for rare earth products produced domestically or in partner countries, even at higher costs.
Photo: Eivaisla via Canva
