Whenever news about semiconductor or EV components mentions unfamiliar mineral names, many readers understandably brace themselves. Gallium, germanium, tantalum—the list of minerals subject to restrictions keeps growing, yet the shared vulnerability behind them rarely gets explained. On January 6, 2026, China imposed same-day restrictions on exports to Japan of dual-use items destined for military-related uses or end-users. Should this escalate into a full-scale rare earth embargo similar to 2010, the estimated economic loss would reach roughly ¥660 billion over three months and approximately ¥2.6 trillion over one year. Behind the recurrence of such export restrictions lies a shared weakness: a refining structure that differs from mineral to mineral.
The ¥660 billion estimate behind the export restrictions on Japan
China's Ministry of Commerce notice, which took effect immediately on January 6, 2026, targeted exports of dual-use items to Japan destined for Japanese military users or military purposes, as well as end-users or uses that would contribute to enhancing Japan's military capabilities. It did not blanket-ban all exports to Japan, but the definition of "end-users or uses that contribute to enhancing Japan's military capabilities" was not initially spelled out in concrete terms, making it practically difficult to judge which transactions would run afoul of the restrictions. China's Ministry of Commerce subsequently added companies to its lists in February and June—20 companies subject to controls and 20 under watch each month (40 per month, 80 in total)—gradually clarifying which firms are affected, though the ambiguity in the definitions of use and end-user themselves remains. Because almost no grace period was given between announcement and implementation, companies handling the covered items had virtually no time to take preparatory measures such as building up inventory or securing alternative supply sources.
The ¥660 billion figure itself is not a direct estimate of the impact of the January 6 restrictions. Takahide Kiuchi of Nomura Research Institute estimated the economic damage of a hypothetical full-scale Chinese rare earth export embargo by applying sector-specific production decline rates—based on 2010-era Ministry of Economy, Trade and Industry surveys and other sources—to the market size of each sector, arriving at roughly ¥660 billion if such a scenario lasted three months and about ¥2.6 trillion if it lasted a year. The core of the issue is that the risk of the January 6 dual-use restrictions escalating into this full-scale scenario cannot be ruled out. While the current scope is based on the existing dual-use item list, analysts note that if the definitions of end-user and use are interpreted broadly, the impact could extend to semiconductors, defense, and EV-related components—in which case the effects would spread beyond exporting firms to the entire domestic industry that depends on those components.
This is not the first time such a measure has been taken. Triggered by the 2010 Senkaku Islands dispute, China effectively halted rare earth exports to Japan, prompting Japan to respond by developing alternative supply sources and rare-earth-saving technologies. That a similar measure was invoked again 16 years later, in 2026, means the underlying dependency structure was never actually resolved.
Whereas the 2010 rare earth embargo was limited to specific mineral types, this time the measure operates under the broader and more ambiguous framework of dual-use items. Because this framework allows items to be added or removed flexibly after the fact, it is harder for Japan to narrow down which minerals to target with countermeasures than it would be with a restriction aimed at a single specific mineral. This operational flexibility is the biggest difference separating 2010 from 2026, and without distinguishing this structure—which varies by mineral—it is impossible to prepare for the next tightening of restrictions.
Primary versus by-product minerals: the refining structure that divides rare metals
An August roundup by Interesting Engineering, "10 Critical Minerals the World Must Secure," lists ten minerals from copper to tungsten side by side. But it offers almost no framework for evaluating which minerals are easy to ramp up production for and which are not. Even when lumped together under the same term "supply risk," the nature of the crisis differs entirely between copper and gallium. Although not addressed in that article, what deserves attention here is the difference in refining structure that determines how easily each mineral's production can be increased.
Copper, lithium, and nickel are primary minerals—mined and refined specifically for the metal itself. When prices rise, capital flows toward new mine development and smelter expansion; supply can respond to market forces, even if it takes time. Gallium and germanium, by contrast, are by-products generated during the refining of other metals. Gallium is recovered during the process of producing alumina from bauxite, while germanium is recovered from zinc refining residues. Tantalum is closer to a primary mineral in that coltan ore itself is mined for its own sake, but it carries a different kind of vulnerability: supply is concentrated in specific conflict-affected regions such as the DRC and Rwanda (discussed later).
Production volumes are determined by the refining plans for the primary metals—aluminum and zinc—and no matter how much gallium or germanium prices rise, refiners have little incentive to invest in by-product recovery equipment at the expense of altering their primary production plans. The motivation to build a new alumina refining plant lies in aluminum demand, and the gallium recovery equipment attached to it tends not to be the deciding factor in investment decisions. In other words, it is the supply-demand balance of a different metal—not the mineral itself—that holds the reins on production increases. This single point is precisely what makes by-product minerals easy tools for political pressure. From the perspective of the side whose exports are cut off, even trying to counter by raising prices offers little leverage, since the means to move supply volume are scarce to begin with.
Even among the ten minerals covered, concentration levels vary widely. Copper's supply shortfall, per the International Energy Agency's (IEA) estimate as of July 2026, is a matter of up to a 25% gap, whereas China's share of gallium production reaches 98–99%. According to the U.S. Geological Survey (USGS), production capacity for low-purity gallium outside China accounts for just over 10% of the global total, but most of it sits idle or operates at low utilization. The former is a structure of "shortage, but room for production remains worldwide"; the latter is a structure where "the means of production exist in other countries, but little incentive exists to actually run them." The former is a shortage that capital can fill; the latter is a maldistribution that rising prices alone struggle to resolve.
The vulnerability of primary minerals, shielded by market scale
Copper is a mineral for which the IEA estimates that planned supply could fall short of demand by as much as 25% by 2035. Driven by rising demand from data centers, EV motors, and power grids, total copper demand is projected to grow by about 7 million tons by 2040. That is a serious number, but copper's market is large enough that the IEA estimates roughly $350 billion in new investment will be needed for this single mineral category by 2040—and rising prices retain the power to attract that capital.
Lithium follows a similar pattern. IEA demand forecasts project growth of three to five times current levels by 2040, with rising demand for EV batteries directly drawing investment into mine development. Nickel, used in both stainless steel and EV batteries, has actually seen production concentration deepen: Indonesia's share is estimated to have grown from 61.3% in 2024 to around 66% in 2025, according to industry estimates. The country continues to attract smelting facility investment, so even as concentration rises, investment activity itself remains brisk.
The IEA estimates that investment in new mines by 2040 will total about $500 billion under a scenario where current policies continue, and about $600 billion under a scenario aligned with decarbonization targets. The larger a mineral's market, the more easily it attracts this capital, and in massive markets like copper and lithium, room still remains for price incentives to drive investment.
Cobalt occupies a structure somewhere between primary and by-product minerals. Used in EV battery cathodes and specialty alloys, mining is concentrated in the Democratic Republic of the Congo (DRC), which accounts for about 76% of global output (2024, USGS), while refining is concentrated in China, at roughly 75–80%. Because mining and refining nations are separated, even if the DRC increases extraction, refining capacity remains a separate bottleneck. This split structure anticipates part of the problem that by-product minerals, discussed next, also face.
Graphite, used in EV battery anode materials, is projected to remain roughly 80% Chinese-controlled even by 2035 in terms of processing into battery-grade material. Graphite itself is closer to a primary mineral, but because a separate bottleneck exists in the advanced processing required to reach battery grade, large market size does not directly translate into diversified investment. This example shows that what determines ease of production increase depends not only on market size but also on which stage of the process constitutes the bottleneck.
Why hard-to-scale minerals become weaponized and vulnerable
Gallium is the archetypal by-product mineral, with China controlling 98–99% of global low-purity production. China introduced an export licensing system for gallium and germanium on July 3, 2023, which took effect on August 1 of that year. In December 2024, it took the stronger step of a complete ban on exports to the United States (this outright ban has been temporarily suspended from November 2025 through the end of November 2026, though the standard licensing system and the ban on military-use exports remain in effect). The fact that recovery volumes are tied to the production plans of the aluminum industry's bauxite refining process means supply cannot be flexibly ramped up in a short period, even if demand from power semiconductors or radar applications surges. Germanium, similarly recovered as a by-product from zinc refining residues and coal ash, is likewise difficult to substitute for uses such as fiber optics and infrared sensors.
Tungsten, used in cutting tools and drill bits made of cemented carbide as well as defense-related armor-piercing cores, is a mineral with few available substitutes. Following China's export restrictions in February 2025, prices spiked to record highs. Because the magnitude of the increase varies by source, no single figure can be stated definitively, but the sheer speed with which the market shifted after the restriction was announced itself illustrates the fragility of a mineral whose supply is overwhelmingly dependent on a single country.
Tungsten and rare earths can, depending on the deposit, sometimes be obtained as by-products or co-products of other minerals, but most are mined and refined as standalone mineral categories, meaning the initiative for increasing production is not entirely held hostage by another metal, unlike gallium. Even so, China's overwhelming market share is the result of decades of national investment and accumulated refining technology—closer to a product of policy decisions than of geological maldistribution. The IEA's forecast that China's share of rare earth refining will fall from over 90% in 2023 to 70% by 2035 illustrates how this type of concentration can be eroded depending on other countries' investment decisions. Here lies a third character of vulnerability—distinct from both gallium and copper—created by policy choices.
Tantalum displays yet a fourth type of vulnerability, distinct from either of the above. Coltan, the raw material for tantalum, is ore mined specifically for its own sake in places like the DRC (though globally it can sometimes also be obtained as a by-product of tin refining slag, among other sources). The Rubaya area in North Kivu province, DRC, alone is said to supply roughly 15% of global tantalum production (a UN estimate cited by the NGO Global Witness), and parts of that region are reportedly under the control of M23. What obstructs increased production here is not a refining structure but the vulnerability of a conflict mineral—where the supply region itself is under the influence of armed groups. If gallium is a mineral "bound by refining plans and unable to move," tantalum is a mineral that "can move, but whose movement risks becoming a funding source for armed groups."
Those positioned to strengthen their standing with each new restriction are emerging refiners in the U.S. and Malaysia advancing diversification of refining capacity, and Australian lithium mining companies pursuing substitution using domestic resources. The IEA has confirmed progress on new projects in the U.S. and expansion plans in Malaysia, and the repeated search by customer companies for alternative supply sources with each restriction can become a tailwind for these emerging players. Here lies an asymmetric structure in which benefits and burdens tend to fall on opposite sides.
On the losing end are domestic manufacturers incorporating Chinese gallium and germanium into power semiconductors and radar components, as well as informal miners in the DRC's coltan-mining sites who remain in precarious positions. For minerals with few alternative supply sources, the costs and time required to search for substitute materials and redesign products after a restriction takes effect fall directly on companies as a burden. Research by Global Witness points out that mining sites around the Rubaya area are prone to falling under the influence of armed groups, and that downstream electronics manufacturers struggle to trace their supply routes. Although the reasons blocking increased production differ between gallium and tantalum, the pattern of generating opposite burdens upstream and downstream is a common thread.
Recycling and seabed resources: Japan's countermeasures
In its fiscal 2026 budget, Japan's Ministry of the Environment allocated ¥37.9 billion for a resource recycling promotion project covering metal resources including rare metals and rare earths—a 63% increase from the initial fiscal 2025 budget, signaling that the Japanese government has begun in earnest to address this structural weakness. If recovery volumes from so-called "urban mining"—recovering metals from used electronic devices—can be increased, Japan could reduce its dependence on new mine extraction and primary refining in China while securing supply sources. Even recycling from used products still requires separate processes such as dismantling, sorting, and wet or dry refining.
Targets for recycling include rare metals embedded in used smartphones, EV motors, and household appliances. The degree to which urban-mining recovery technology has been established varies by mineral and product, and the Ministry of the Environment's project covers not only support for equipment installation but also demonstration of recovery technology itself. If recovery volumes can be boosted, it would be significant in that it would allow Japan to partially escape a structure where control over supply rests with other countries' refining plans or the political stability of specific regions.
More concrete progress has emerged in ocean resource development. The Japan Agency for Marine-Earth Science and Technology (JAMSTEC)'s deep-sea scientific drilling vessel Chikyu conducted mining system tests in Japan's exclusive economic zone (EEZ) off Minamitorishima from January 12 to February 14, 2026, and on February 1 succeeded—for the first time in the world, as announced on July 24—in continuously lifting mud from a seabed depth of 5,569 meters to the vessel above. According to the announcement, of the total rare earth content in the roughly 50 tons of rare earth mud collected, about 54% consisted of medium-to-heavy rare earths in strong demand, such as yttrium and dysprosium, with no significant levels of hazardous or radioactive substances detected. A full-scale mining test is planned for February 2027, but this remains a technical demonstration; verification of the cost and profitability required for commercial production still lies ahead.
According to IEA projections, China's share of rare earth refining is expected to fall from over 90% in 2023 to 85% in 2025 and to 70% by 2035—a drop of only about 20 percentage points over a decade or so. The pace at which recycling and seabed resources can reshape the structure is far slower than the pace at which political export restrictions can expose the structure's fragility. Restrictions take effect the same day they are announced, while building alternative supply chains takes years from budget allocation to implementation. This asymmetry is one reason measures like the export restrictions on Japan keep proving effective, again and again.
What needs to align for the structure to change
For primary minerals like copper and lithium, supply will respond—albeit with a lag—as long as price signals and investment flow sufficiently. Even the 25% supply-demand gap estimated by the IEA has room to shrink, given that this is a market capable of attracting capital. Even if the underlying concentration structure does not change—China holding an average 70% share of refining across 19 of 20 critical minerals—for primary or strategically concentrated minerals, a path exists for other countries' refining capacity to grow over time with sufficient investment. Primary minerals, by-product minerals, and strategically concentrated minerals like tungsten and rare earths each require different prescriptions in this regard.
For by-product minerals like gallium, as long as the initiative for increasing production remains held by another metal's refining plans, supply is unlikely to increase merely because prices rise. For the previously mentioned projected decline in China's rare earth refining share to materialize, investment specialized in by-product recovery technology and the practical implementation of alternative supply sources—such as urban mining and seabed resources—must advance simultaneously. If these two elements fail to mesh, supply volumes will remain stubbornly unresponsive no matter how high prices spike. In tantalum's case, an additional layer compounds the difficulty: governance of the supply region and conflict-mineral traceability—issues that investment alone cannot resolve. This structure is precisely what makes the response more difficult than for primary minerals.
The January 2026 export restrictions on Japan are merely one instance that drove home to Japan that this structure has yet to change. Both the Ministry of the Environment's ¥37.9 billion recycling budget and the rare earth mud test drilling off Minamitorishima are initiatives still in the process of reshaping that structure. Neither offers immediate results, but in the sense that they represent supply sources that do not depend on other countries' refining plans or the political stability of specific regions, the direction is sound. How much the budget scale and the progress of test drilling are built upon in the years ahead will serve as a measure of how serious this direction really is.
Whether Japan's domestic manufacturing sector—dependent on Chinese-made components ranging from power semiconductors to drone parts to defense equipment—continues to be subjected to the same pressure tactics going forward hinges on how much alternative supply networks and traceability can be built over the coming decade. Viewing ten minerals side by side, as in that earlier roundup, obscures exactly this distinction. Once it is accounted for, the response to hard-to-scale minerals boils down to a single question—not price, not negotiation, but how far recovery technology, alternative supply sources, and traceability can be advanced simultaneously, tailored to the bottleneck specific to each mineral.