Nature-positive rare earth governance: Japan's strategy in a China-dominated system

Abstract

Rare earth elements (REEs) are critical to decarbonization and digital infrastructure, yet their supply chains exhibit pronounced structural asymmetry and highly uneven environmental footprints, with China controlling roughly 69 % of global mine output and around 85–90 % of refining capacity. This article reviews Japan's rare earth security strategy as a resource-poor but technology-intensive economy along three axes: (1) the geological potential, environmental trade-offs, and realistic development role of deep-sea REY-rich mud within Japan's exclusive economic zone, especially deposits around Minamitorishima Island; (2) the structural divergence between China's integrated, volume-oriented “mine-to-magnet” system and Japan's specialization in high-purity, high-value segments; and (3) portfolio diversification through Australian and Southeast Asian partnerships, domestic recycling, and governance tools oriented toward ESG and nature-positive outcomes. Methodologically, the paper employs an exploratory three-scenario framework for 2030–2035 (conservative, central, ambitious). Rather than a formal quantitative model, these scenarios serve as heuristic tools, informed by recent USGS and IEA projections, to examine how non-Chinese capacity expansion and policy interventions could reshape Japan's supply security. The analysis shows that, although Minamitorishima Island's deep-sea deposits hold significant resource potential regarding heavy REEs such as Dy and Tb, substantial techno-economic hurdles (costs >50 USD/kg) mean they function primarily as a high-cost strategic reserve for extreme contingencies rather than a commercially competitive substitute. Japan's comparative advantage instead lies in high-purity separation, heavy-rare-earth-lean magnet design, and advanced circularity. In the central scenario, China's share of global mining moderates to around 50–55 % by 2035, allowing Japan to move towards a diversified supply matrix. The findings suggest that resilience for resource-poor economies is achieved not by replicating China's scale, but by combining diversification with reduced environmental intensity, and by embedding nature-positive principles—contingent upon aggressive policy support for circularity and traceability—into supply-chain governance.