Japan to start new rare earth supply chain for electric vehicle production

Rare earth materials are used to produce rare earth magnets, which are key to the production of electric vehicles and wind turbines.

Sumitomo Corporation (SC) and an American rare-earth materials company MP Material signed an agreement on which SC will be the exclusive distributor of NdPr oxide produced by MP Material to Japanese customers, according to a statement by SC.

Renewables expert Karah Howard of Pinsent Masons said: “Rare earth plays an extremely important role in achieving carbon neutrality. For this reason, the demand for rare earth is expected to grow in the coming years as a result of global efforts to reduce CO2 emissions.”

Efforts to electrify and decarbonise the global economy are causing demand for rare earths to grow rapidly, according to a Nikkei report. Under the agreement, MP Material will deal with mining, smelting of ores and separating elements from them. Refined elements will be sold to Japanese magnet makers straight away. Further metalisation of refined elements will also be undertaken by companies in Vietnam and the Philippines in some cases.

The new supply chain will be operational in July, according to the announcement.

In December 2022, Japan set out plans to extract rare earth metals from the mud on the deep sea bottom in the region around Minami-Torishima Island in 2024. Tokyo will work on extraction technologies in this year.

Japan has planned to do so because it wants to reduce “excessive dependence on specific countries, carry forward next-generation semiconductor development and manufacturing bases, and secure stable supply for critical goods, including rare earths”, according to another Nikkei report.