September 2010. Tokyo.

A Chinese fishing boat collided with two Japanese Coast Guard ships near the Senkaku Islands. Beijing cut rare earth exports to Japan. Factory floors went quiet. Toyota, Hitachi, Sony — they all ran on Chinese rare earths, and none had a backup plan.

That was sixteen years ago. Last week, Japan got closer to building one. On July 24, the government released results from a deep-sea mining test unlike anything tried before. A ship called the Chikyu dropped a pipe 5,700 meters to the ocean floor near Minamitorishima, a coral atoll 1,900 kilometers from Tokyo, and pulled up about 50 tonnes of mud.

What they found changes the math. Medium and heavy rare earths — the scarce ones China guards most tightly — made up 54% of the total rare earth content. Yttrium accounted for nearly 30%, neodymium for 18.4%, gadolinium for 4.9%, and dysprosium — the heat-resistant element every EV motor depends on — for 4.6%.

Prime Minister Sanae Takaichi posted on X within hours, calling the elements “critical for semiconductors and automobiles.” The government wants domestic production by 2028. That is a fast timeline for something no country has ever done — mining rare earths from the deep ocean at commercial scale.

And then there is cost. The Japan Financial and Economic Research Institute puts extraction at somewhere between $7,000 and $70,000 per tonne. Chinese concentrate sells for about $5,390. At the high end, Japanese seabed rare earths could cost thirteen times more.

So why bother? Because Japan has been cut off before — in 2010 over a territorial dispute, and again in 2026 when Beijing banned exports to pressure Tokyo over Taiwan. Both times, Japan was stuck. Yasuhiro Kato, a University of Tokyo professor who has studied this deposit for fifteen years, says a government subsidy covering the gap with Chinese prices would make it viable. Deep-sea mining is expensive. Depending on a country that has weaponized its supply twice in sixteen years is more expensive. That is the bet Japan is now making.

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CSIS director Gracelin Baskaran told Mining.com that China’s export restrictions have backfired — uniting Japan, Europe, Australia, and the US to invest in mines and refining outside China faster than anyone expected. She pointed to a meeting convened by Secretary of State Marco Rubio as evidence. But Rare Earth Exchanges pushed back hard. Their analysis says Beijing holds dominant control through at least 2027 because the West still lacks the separation and magnet-making capacity to replace Chinese supply at scale. China refines about 90% of the world’s heavy rare earths and makes roughly 93% of all permanent magnets. The capacity gap is real.

The IEA’s 2026 Global Critical Minerals Outlook found that mining investment dropped 9% in 2025, ending several years of growth. For most minerals, supply concentration kept climbing — refining stayed locked in a few countries. Rare earths were the one exception. New projects in the US and expanded production in Malaysia pushed concentration down, making it the only mineral category where that happened. But the IEA also warned that refining capacity outside China is on track to meet just 66% of expected mine output by 2035. Mining is expanding. Refining is not keeping up.

American Rare Earths said its pre-feasibility study at Halleck Creek, Wyoming, stays on track for Q3 2026 — and the company has already started feasibility-level work ahead of the study’s release. CEO Mark Wall told InvestorIntel the goal is to supply both heavy and light rare earths from what the company calls the largest rare earth deposit in the United States. Halleck Creek would add a domestic source at a time when planned mines in the US are plentiful but operating ones are still very few.

Gracelin Baskaran, Director, Critical Minerals Security Program, CSIS — Mining.com,
July, 2026

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Rare Earth #9 of 17

Gadolinium is the rare earth inside every MRI machine. Doctors inject gadolinium-based contrast agents to make soft tissue visible — tumors, blood vessels, inflammation. Without it, the images would be shadows. It also absorbs neutrons better than nearly any other element, which is why it sits inside nuclear reactor control rods. This week, gadolinium turned up in Japan’s deep-sea mud at 4.9% of the total rare earth content. The metal trades at $61.73/kg on the Shanghai Metals Market, up 12.8% from June. China supplies almost all of it. If you have ever had an MRI, you have depended on gadolinium — and on China.

The index registered 270.5 on July 24, with NdPr oxide climbing toward $112–$115/kg inside China. Heavy rare earths remain hard to source outside Chinese borders at any price.

— Rare Earth Exchanges

Jack Lifton’s latest column uses tungsten as a case study for critical minerals investors. The ore is not where the money is made. Value sits in refining, alloys, and finished parts — the stages China dominates.

— InvestorIntel

A Resilire survey of 400 Japanese manufacturers found that rare earth procurement costs have risen an average of 22% over the past year. Over 40% of those firms reported increases of 20% or more.

— InvestorIntel / Resilire

REEx’s weekly Structural Momentum Index rose to 6.1 for the week of July 6–11. Malaysia emerged as the top non-China rare earth refining hub, driven by Lynas and Carester expansions.

— Rare Earth Exchanges