US and Japan strike rare earths deal

The United States and Japan have signed a framework agreement to secure the supply of rare earths and critical minerals, aiming to reduce reliance on China’s dominant position in the global market.

U.S. President Donald Trump and Japanese Prime Minister Sanae Takaichi inked the deal during Trump’s visit to Tokyo, part of his week-long tour of Asia. The document covers cooperation on extraction, recycling, stockpiling and investment in mineral supply chains vital to the defence, automotive, electronics and energy sectors. While the deal outlines a range of policy measures, it includes no direct financial commitments.

Both governments also released a list of projects in the fields of energy, artificial intelligence, and critical minerals, with Japanese companies eyeing investments of up to $400-billion in the U.S.

The White House hailed the agreement as the foundation of a “new golden age of the ever-growing U.S.–Japan alliance.” Much like similar agreements made with Australia and Malaysia in recent weeks, the agreement with Tokyo includes commitment from both countries to mobilize government and private investment to boost domestic mining and processing. The parties also pledged to jointly identify key projects and gaps in the supply of rare earths and derivative products such as permanent magnets, batteries, catalysts and optical materials.

Price floors

The framework includes a pledge to deter strategic asset sales and maintain pricing mechanisms that reflect the true cost of responsible extraction. BMO commodities analysts pointed to the agreement’s implicit support for price floors, a topic gaining traction since the U.S. Department of Defense set a $110 per kg lower limit for neodymium praseodymium in its deal with MP Materials (NYSE: MP).

Takaichi is Japan’s first female leader. She became prime minister last month after her predecessor resigned following election losses a year ago and coalition wrangling for the past 11 months. 

Trump is scheduled to meet Chinese President Xi Jinping in South Korea on Thursday. U.S. and Chinese negotiators have reportedly prepared the groundwork for discussions on a possible trade deal, with rare earths expected to feature prominently.

China, which accounts for the majority of global rare earth production, imposed supply restrictions in April in response to U.S. tariffs and limits on semi-conductors. It expanded those measures this month, now requiring export licences for goods containing even trace amounts of certain rare earth elements.