China may have agreed to pause for one year its sweeping export controls on rare earths, but this hiatus offers only partial relief to global rare-earths users after a tumultuous few months. It is being seen more as a window of opportunity to restrategise, till China weaponises trade in these elements again.For countries looking for solutions, Japan offers a replicable template. Long before China’s wolf warrior approach to multiple rare earth elements and magnets widely used in the automotive, robotics and industrial sectors, Japan tweaked its approach to supply chain resilience after unwittingly emerging as the canary in the coal mine for China’s mineral dominance.The Chinese blockadeOn September 7, 2010, a Chinese fishing boat collided with two Japanese coast guard vessels off the islands of Senkaku in the East China Sea, following which the coast guard arrested the boat’s captain. Among the Chinese government’s responses was stopping the export of rare earth minerals to Japan, which sent the Japanese industry into complete panic.Japan’s famed automobile sector was dependent on rare earths for the production of magnets indispensable for producing cars. At the time of the ban, Japan was dependent on China for nearly 90 per cent of its imports of these minerals. While the kerfuffle was eventually resolved after the release of the boat captain, the prices of rare earths surged 10 times in a year following the incident.Japan’s fightbackAlongside stockpiling, recycling and pushing alternative technologies, Japan has, after the 2010 incident, invested heavily into non-China rare-earth projects.This includes Australia’s Lynas Rare Earths, the world’s largest rare earth producer outside of China. Japan has a strategic partnership with Lynas, involving investment and supply deals with Japanese companies such as Sojitz and JOGMEC (Japan Organisation for Metals and Energy Security, a Japanese government institution that was formed by the merger of the former Japan National Oil Corporation and the former Metal Mining Agency of Japan) to secure rare earth minerals outside of China. This partnership ensures a stable supply of critical materials such as neodymium and dysprosium for Japanese industries, such as those producing magnets for automobiles and wind turbines.Japanese companies also invested in the facilities needed to process and refine the materials into inputs that can then be used by its industries. As a result, Japan’s overall dependence on Chinese rare earths has now dropped to below 60 per cent, according to data provided by London-based Argus Media. According to Japanese auto industry executives, Tokyo expects to further lower its dependence on Chinese rare earth imports to below 50 per cent this year. China’s stranglehold in the critical minerals supply chain is evidenced from the fact that it produces nearly 70 per cent of the world’s supply of rare earths from mines and processes almost 90 per cent of global output. “We’ve all known for a while that a Chinese-led supply chain blockade could happen, but now it has actually unfolded before us, it is very clear that countries need to have alternatives to address the China dependency,” a senior executive with a Japanese automaker told The Indian Express on the sidelines of the recently concluded Japan Mobility Show 2025.The Japanese templateImmediately in the wake of the Chinese blockade, the Japanese government put together a package of measures to beef up the resilience of its rare earth minerals supply chain. A supplemental budget of JPY100 billion (Japanese yen, well over $1.1 billion at the time) was prepared in October 2010, less than a month after the incident. The speed and the scale were unprecedented.Story continues below this adThe more important aspect was that despite the Chinese threat blowing over in a couple of months, Tokyo persisted with its plans.The consumption of rare earths in Japan now is well under half the level of what it was in 2010, offering proof of how effective these steps have been. “These developments have insulated Japan from being targeted by another embargo, despite a series of diplomatic disagreements with China since the 2010 incident. Lowering our dependence further is a work in progress,” a senior executive of an automobile major that is part of the Japan Automobile Manufacturers Association, a trade association with its headquarters in Tokyo, told The Indian Express.Even a dependence of 50 per cent is high. And what is worrying is that China’s dominance is not just limited to rare earths, but expands all the way into global critical minerals supply, including elements such as gallium and germanium, as well as the entire lithium value chain.The takeawaysThe fishing boat incident was a wake-up call for Japan, as the sudden blockade ostensibly caught policymakers by surprise even though the vulnerability in the supply of rare earths was evident to most people. At some point, for policy makers across geographies, it makes sense to analyse the vulnerability of the country’s supply chains.Story continues below this adA proactive assessment across all critical supply chains could help, especially entailing overdependence on one or a small group of suppliers from one country, even one that has not actively weaponised trade. This involves elements that go beyond rare earths and include lithium, where there is a dependence on the Li triangle involving the three countries of South America (Bolivia, Argentina and Chile). Then there is the dependence on the Congo for Cobalt, on Indonesia for nickel, and on Morocco for phosphorus, an element critical to the fertiliser industry.The Japanese response also shows the need for a comprehensive, multi-pronged policy approach. Rather than relying on a single measure, Japan diversified its sources, allocated money for technology and alternative materials, and spent years building strategic reserves, all while maintaining a long-term vision through recycling initiativesThe other lesson is that like-minded countries need to get together to tide over vulnerabilities, including possible stockpiling of the kind that Japan pursued for REs after 2010.India’s RE exposureThe impact of China’s rare earth restrictions on India is expected to be limited, given its relatively low domestic consumption of rare earths (although demand has seen some growth in recent years). India imported 2,270 tonnes of rare earth elements in 2023-24, up 23% from 1,848 tonnes in 2019-20, according to the Ministry of Mines. Imports from China accounted for 65% of this amount, and another 10% came from Hong Kong.Story continues below this adDomestic mining and refining, meanwhile, remains modest, led by state-owned IREL Ltd, which operates a processing unit with a capacity of over 10,000 tonnes per annum. In contrast, China refined over 2 lakh tonnes of rare earth elements in 2023 alone. India is, however, hoping to ramp up its exposure to rare earths. In November last year, the country launched an auction for seven seabed blocks in the Andaman Sea for exploration and eventual mining. These blocks are estimated to hold polymetallic nodules and crusts, which can contain heavy rare earth metals.The Department of Atomic Energy is learnt to have accorded in principle approval for the futuristic proposal of IREL towards setting up of rare earths theme parks. A Rare Earth Permanent Magnet Park in Vizag and Rare Earth and Titanium Theme Park in Bhopal are coming up with the funding assistance of the Centre, which could enhance IREL’s visibility in the strategic and niche sector.The US too is getting back into rare earths processing. The Trump administration is working on an executive order to allow stockpiling of deep-sea metals from the Pacific seabed, aiming to reduce reliance on China for battery minerals and rare earths, the Financial Times reported in April.Like the US, the EU heavily relies on imports, particularly from China, although plans are underway to develop domestic capabilities. Belgian chemical group Solvay, for instance, which operates the largest rare earths processing plant outside of China in La Rochelle, France, aims to supply about a third of Europe’s processed rare earths demand for permanent magnets by 2030.