Shin-Etsu Chemical builds new rare earth plant; Japan reduces reliance on China for rare earths

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On June 11, 2026, according to Nikkei Chinese, Shin-Etsu Chemical announced that it will invest in building a rare earth refining factory in Fukui Prefecture to promote the large-scale production of rare earth products, with the intention of reducing dependence on China's rare earth supply chain. This is also the first time since 2008 that the company has built new rare earth smelting facilities in Japan. Affected by bilateral relations, the scale of rare earths imported by Japan from China plummeted by 80% year-on-year from March to April this year.

The report mentions that since the 1990s, China has engaged in rare earth smelting and processing businesses. At that time, environmental supporting facilities to relevant links were not yet perfect, coupled with changes in the market ecological stability, the profit margin of the rare earth sector narrowed, and Japanese regional companies successively withdrew from rare earth-related fields.

Changes in the supply chain landscape are also related to China's export regulation policies. In April 2025, China officially implemented export controls on 7 types of rare earth items including dysprosium; starting from January 2026, in accordance with regulations on dual-consumption items, it further tightened rare earth export controls targeting Japan.

Regarding issues related to rare earth exports, spokesperson Lin Jian responded at a regular Ministry of Foreign Affairs press conference on June 9. On that day, a reporter asked about the US call to China to resume rare earth supplies to Japan. Lin Jian stated that relevant specific matters can be consulted with the competent Chinese authorities. He also emphasized that China manages various dual-consumption items in accordance with laws and regulations, and strictly prohibits relevant materials from flowing to Japanese military entities, being utilized to military purposes, and any fields that might fuel the research of Japan's military strength. This move aims to guard against the tendency of Japan's re-militarization and pursuit of nuclear weapons.

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