By Focus | 2026-02-17

Sharing the goal of reducing reliance on China for the raw materials needed for today's technology essentials, Japan and Australia have expressed their intent to work closely together to build an alternative supply chain.

Current geopolitical tensions and Beijing's recent export curbs are opening additional avenues for greater cooperation, analysts say.

Strategic alliances

"Australia's abundant deposits of critical minerals, alongside the expertise to extract and process those minerals, presents an invaluable economic opportunity," Minister for Trade and Tourism Don Farrell said in a statement published February 4.

During Critical Minerals Ministerial meetings held in Washington, DC, Australia launched a new Critical Minerals Prospectus outlining 49 mines and 29 midstream processing projects ready for investment, alongside Japan and other partners at a US-led summit.

Last April, Canberra announced a $1.2 billion AUD ($843,000,000) reserve of critical minerals it says are vulnerable to supply disruption by China.

The Critical Minerals Strategic Reserve initially will focus on antimony, gallium and rare earth elements, the Ministry of Trade and Tourism said in a statement January 12.

These materials are used in clean energy, advanced manufacturing and defense systems.

In addition, the government created the $4 billion AUD ($2.8 billion) Critical Minerals Facility, which provides government-backed loans and equity support for projects, and a Critical Minerals Production Tax Incentive that offers a 10% refundable tax offset for processing 31 eligible minerals.

Breaking China's grip

Beijing on January 6 targeted Japan with new export restrictions on rare earth-related products, including those of non-military use.

The move is largely seen as retaliation for comments made last November by Japanese Prime Minister Sanae Takaichi, who implied an attack on Taiwan could constitute an "existential threat" to Japan and justify a military response.

Against that backdrop, Japan is understandably enthusiastic about Australia's plans, Nikkei Asia reported January 20.

Japanese Finance Minister Satsuki Katayama said in a Japanese post on X that Canberra's strategic reserve was "moving at full speed!"

Tokyo is "looking to Australia to fill a role that China has previously played in critical minerals supply," former Australian ambassador to Japan Justin Hayhurst told the Australian Financial Review January 12.

Previously, Chinese critical minerals met 90% of Japan's demand. After a maritime squabble in 2010 that disrupted shipments, Tokyo began diversifying suppliers and reduced reliance on China to about 70%, Nikkei Asia reported.

That effort included collaboration between the public-sector Japan Organization for Metals and Energy Security and Tokyo-based Sojitz Corporation. They invested in Australia's Lynas Rare Earths, which operates the Mount Weld mine in western Australia and processes materials in Malaysia. Sojitz began importing heavy rare earths from Lynas last October.

Safety net

The alliances forged in Washington aim to provide market stability, potentially through coordinated price floors to protect emerging supply chains from external shocks.

A joint statement by the United States, European Commission and Japan February 4 said the partners are "taking significant steps towards increasing their economic security and national security" by boosting resilience in the critical minerals sector.

While Tokyo recently retrieved rare earth mud from the deep sea floor near Minamitori Island, commercial production is not expected until the 2030s.

Accessing Australia's strategic reserves is a good first step toward reducing Beijing's leverage over supplies, analysts say.

"A reserve, potentially during disruption, can buy time, it can blunt those effects of disruption, and can prevent certain political or commercial concessions that China wants to achieve by using that weapon," Vlado Vivoda, a scholar at the Sustainable Minerals Institute at the University of Queensland in Brisbane, Australia, told Nikkei Asia.

For Japan, closer cooperation with Australia offers clear benefits, said Ian Satchwell, an affiliate at the Global Center for Mineral Security and senior fellow at the Australian Strategic Policy Institute.

"The commercial return is very clear, because the loss of supply of key critical minerals, much of which comes from China, would be an existential threat to sections of the Japanese manufacturing sector," he told Nikkei Asia.

The commercial returns for Australia will come over time, given "the level of need for an alternative supply chain across a number of countries," Australian Resource Minister Madeleine King said.

"It's going to be a long road, there's no doubt about it, because it is a severely challenged industry," King said at a news conference January 12. "It won't be revenue upside in the immediate term, but I'm confident, as we change the dynamics of this global market, based on our abilities and our standards, that there will be an upside for the Australian taxpayers."