Japan warns of rare‑earth supply squeeze as China curtails exports

China, which controls about 70% of global rare‑earth production and 60% of reserves, has halted shipments of key materials such as terbium, dysprosium and yttrium oxide to Japan since November. Japanese companies have sharply increased filings on the Tokyo Stock Exchange flagging supply‑risk concerns – nearly 200 filings in May‑June, with more than two‑thirds indicating negative impacts on production or financial performance. Watchmaker Citizen Watch and medical‑device maker Omron are among firms citing the risk, though they say current earnings are not yet affected. Analysts note the 2010 trade restriction cost Japan roughly 0.9% of GDP and warn the current shortage could be more severe as rare‑earths become essential for AI‑driven products, electric‑vehicle motors and defense systems. The Japanese government under Prime Minister Sanae Takaichi is pursuing subsidies, investment and cooperation with allies, including a framework with the United States, to diversify supply. Separate research shows Japan and the United States together hold about 80% of high‑value patents in downstream rare‑earth applications, giving them strategic leverage despite China’s raw‑material dominance. “Supply is being restricted, but everyone is starting to use them – and that only makes them even rarer,” said commodities analyst Satoru Yoshida.