On June 11, Japanese chemical giant Shin-Etsu Chemical announced plans to build a rare earth refining plant in Fukui Prefecture. This marks the company’s first new domestic facility of this kind since 2008.
The project’s total investment will be at least 35 billion JPY (≈$218 million), with the Japanese government providing roughly 17.5 billion JPY in subsidies. Shin-Etsu Chemical already possesses leading rare earth production capabilities in Japan, able to refine 16 out of 17 rare earth elements. The output primarily supports its high-performance magnet production, with a portion sold to external customers.
The immediate driver for this investment is supply security concerns. In April 2025, China included seven heavy and medium rare earths, including dysprosium and terbium, under dual-use export controls. Since early 2026, exports of all dual-use items to Japanese military users and related end-users have been further restricted. Rare earths are essential for electric vehicles, wind energy, smartphones, semiconductor manufacturing equipment, and defense systems. Over 60% of Japan’s rare earth imports come from China, making domestic supply capacity a pressing priority.
Global countries are simultaneously advancing rare earth processing capacity.
France: Rare earth processor Carester is building a large-scale separation and recycling facility in Lacq, southwestern France, expected to start operations by the end of 2026. Annual output will include 5,000 tons of refined ore, with 600 tons of dysprosium and terbium oxides and 800 tons of praseodymium-neodymium oxide. The project is supported by the French government (€106 million) and Japan’s JOGMEC & Iwatani Corporation (€110 million). In parallel, USA Rare Earth is investing over €175 million (≈$204 million) in France to expand rare earth metals, alloys, and magnet capacity, strengthening Western supply chains independent of China.
Solvay is expanding its La Rochelle facility in France. Initial processing for permanent magnet minerals began in April 2025. Phase-wise capacity expansion for praseodymium-neodymium, samarium, and dysprosium-terbium production is planned, with dysprosium-terbium production expected to start in 2026. Solvay has also signed supply agreements with US magnet manufacturer Novion, ensuring delivery of praseodymium-neodymium, dysprosium, and terbium oxides to the US market starting in 2026.
India: In November 2025, the Indian cabinet approved a ₹72.8 billion (~$8 billion) support program for rare earth permanent magnet manufacturing, targeting 6,000 tons/year of sintered rare earth magnets. The 2026–2027 federal budget further establishes four rare earth “corridors” covering mining, processing, and magnet production. Companies including Reliance, Vedanta, and Adani have expressed interest in developing rare earth processing facilities in Andhra Pradesh.
Canada: Aclara Resources plans to establish a non-China-dependent rare earth supply chain as early as 2028, leveraging ores from Brazil and Chile and using proprietary processing technology to meet approximately 50% of US EV rare earth demand.
USA: In 2025, the US Department of Defense invested $400 million in MP Materials, becoming its largest shareholder, while committing to long-term procurement and price guarantees for a new magnet factory. MP Materials plans to start heavy rare earth production by mid-2026, producing ~200 tons of dysprosium and terbium annually, enough to supply raw materials for ~10,000 tons of high-performance NdFeB magnets.
Countries including the US, EU, Japan, and India are focusing on building processing capacity rather than just securing overseas mining rights. Early international investments prioritized mining, but recent projects emphasize separation, refining, magnet manufacturing, and recycling.
Currently, about 70% of global rare earth output is concentrated in China, which controls over 90% of processing and permanent magnet production capacity. According to McKinsey and other institutions, by 2035, non-China supply capacity for critical heavy rare earths like dysprosium and terbium is expected to meet less than 20% of global demand.
Moving forward, Chinese companies will need to maintain advantages in raw material security, processing capabilities, and downstream application integration to stay competitive in an increasingly diversified international market.
