Japan to Support Rare Earth Extraction from Waste Electrical Machines

Japan’s Ministry of the Environment will launch support for rare earth recycling starting in fiscal year 2026 to ensure a stable supply of rare earths. Subsidies will be provided for transportation networks, storage facilities, and post-extraction testing equipment to extract rare earths from waste electrical machines and other sources. This aims to effectively utilize domestic resources and reduce dependence on rare earth imports from China.

A verification project will be conducted to recover rare earths from domestic waste. Subsidies will be provided for the costs of transporting waste by truck from various locations to the base and for storage warehouse equipment to ensure the required amount of recycling. Support will also be provided for projects that verify the quality of extracted rare earths and their reuse in products, as well as for the introduction of equipment.

The Ministry of the Environment has newly included 6 billion yen in the fiscal year 2026 budget. If approved in a special Diet session, the verification project and subsidies will be launched in the summer of 2026. The verification project and subsidy recipients will be publicly recruited, with multiple applicants selected.

This initiative targets neodymium, a mineral found in electrical machines and essential for manufacturing powerful magnets. Japan’s Ministry of Economy, Trade and Industry revealed that China accounts for over 90% of the global refining market share. Neodymium is essential for many products, including electric vehicles (EVs), generators, and smartphones.

If recycling is implemented, Japan’s domestic rare earth reserves will increase. The current bottleneck is high costs; many discarded motors in Japan are directly exported overseas as secondhand goods or melted down in electric furnaces to extract only iron. Japan’s Ministry of the Environment points out that “neodymium is almost never recycled in Japan.”

With new support to improve infrastructure, recycling companies will be able to process large quantities of motors, helping to control costs.

The Ministry of the Environment will also support the recovery of rare earths from “electronic waste,” such as discarded electronic circuit boards. Japan already imports electronic waste from Europe and other overseas sources for domestic reuse. The Ministry of the Environment has set a target to increase recycling volume to approximately 500,000 tons by 2030, a 50% increase from 2020. Subsidies will also be provided for equipment used to unload waste at ports.

Rare earths are indispensable for various products, and Japan relies heavily on imports from China. If the Chinese government restricts exports, Japanese companies’ supply chains could be disrupted, and production activities could be significantly affected.

In her policy speech on February 20, Japanese Prime Minister Sanae Takaichi, taking China into consideration, proposed “reconstructing supply chains that are not dependent on any specific country.” Japan will cooperate with the United States to develop rare earth resources in the waters surrounding Minamitorishima Island. Progress in domestic recycling within Japan would be beneficial in securing rare earth resources independent of China.