US and Japan Forge Critical Minerals Alliance With Price Floors to Counter China's Rare Earth Dominance
The US and Japan enacted a critical minerals action plan on March 19 featuring price floors and four joint projects as neodymium prices doubled year-to-date and a $12 billion US strategic stockpile takes shape.
Overview
The United States and Japan enacted a critical minerals action plan on March 19, 2026, establishing the framework for price floors on rare earth imports and launching four joint mining and refining projects on American soil. The agreement, announced by U.S. Trade Representative Jamieson Greer during Japanese Prime Minister Sanae Takaichi’s visit to Washington, represents the most concrete step yet by Western allies to break China’s grip on the materials that underpin electric vehicles, wind turbines, and advanced weapons systems. It arrives amid a dramatic market backdrop: neodymium-praseodymium prices have surged roughly 105 percent year-to-date, China has imposed its strictest-ever export controls on rare earth magnets, and a new $12 billion U.S. strategic minerals stockpile called Project Vault is taking shape.
The Partnership Takes Shape
The action plan lays the groundwork for what Ambassador Greer described as “a binding plurilateral agreement supported by price floors and other measures,” according to a U.S. Trade Representative press release. The price floor mechanism is designed to prevent Chinese producers from undercutting Western mining and refining operations with artificially low prices, a strategy that has historically driven competitors out of business and consolidated China’s market share.
The European Union has signaled its intent to join the framework. Bloomberg reported that the U.S., Japan, and the EU are set to announce plans for a trade agreement in critical minerals that includes price floors and tariffs to counter market distortions by China. A February 2026 critical minerals summit in Washington, hosted by the Trump administration, drew 55 countries and produced bilateral frameworks with 11 nations including Argentina, Morocco, the Philippines, and the United Kingdom.
Four specific projects anchor the U.S.-Japan partnership. Mitsubishi Materials will establish a rare earth refining operation in Indiana to recover neodymium and other elements from discarded permanent magnets in appliances, automobiles, and industrial equipment. A second Mitsubishi facility in the same state, partnered with a British company, will produce copper from electronic circuit board waste. Mitsui & Co. is in discussions with Albemarle, the U.S. chemical company, to jointly invest in lithium mining at Kings Mountain, North Carolina. And Mitsubishi Corp. is acquiring a 30 percent stake in the Copper World mine in Arizona, owned by Canada’s Hudbay Minerals, in a deal valued at approximately $550 million.
China’s Tightening Grip
The urgency behind the alliance is rooted in numbers that have barely shifted in two decades. China controls roughly 70 percent of global rare earth mining, 90 percent of separation and processing, and 93 percent of permanent magnet manufacturing, according to the Center for Strategic and International Studies. These magnets are embedded in everything from F-35 fighter jets and Virginia-class submarines to EV traction motors and offshore wind turbines.
On October 9, 2025, Beijing announced its most aggressive export controls yet, applying a foreign direct product rule to rare earths and permanent magnets for the first time. Starting December 1, 2025, companies affiliated with foreign militaries face automatic denial of export licenses. The restrictions cover heavy rare earth elements at concentrations of 0.1 percent or higher and permanent magnets containing Chinese-origin materials. While China suspended implementation for one year until November 2026, the regulatory architecture is in place and the threat of enforcement remains a powerful lever in trade negotiations.
The CSIS analysis notes that China’s munitions production capacity scales five to six times faster than that of the United States, a gap that rare earth dependencies directly enable. Noveon Magnetics remains the only U.S. rare earth magnet manufacturer. The Department of Defense invested $400 million in equity in MP Materials in July 2025 and extended a $150 million loan for expansion of the Mountain Pass mine in California, the only significant rare earth mining operation in the country.
The Price Signal
Market prices are reinforcing the urgency. Neodymium-praseodymium oxide, the benchmark for permanent magnet feedstock, has risen from approximately $53 per kilogram at the start of 2026 to roughly $108 per kilogram by mid-March, a gain of approximately 105 percent, according to Trading Economics data. The Pentagon has set a pricing floor of $110 per kilogram for NdPr in defense contracts, a signal that Washington considers the current price trajectory a matter of national security.
The surge reflects both structural supply constraints and growing demand. Global EV sales are forecast at 22.9 million units in 2026, each requiring one to two kilograms of NdPr oxide equivalent for its traction motor. Offshore wind installations, which require 200 to 600 kilograms of rare earth elements per turbine, are growing at compound annual rates above 20 percent. Meanwhile, conflict in Myanmar, which supplies roughly 15 percent of global heavy rare earth output, has disrupted shipments, and Chinese export restrictions have introduced a political risk premium into pricing.
The NdPr market is expected to remain in supply deficit for the second consecutive year in 2026, with demand growth from EVs and wind energy outpacing both Chinese production quota expansions and the slow ramp-up of Western mining capacity.
Project Vault: A Civilian Stockpile
The bilateral partnership operates alongside Project Vault, a $12 billion initiative announced by President Trump on February 2 to establish a civilian strategic reserve for critical minerals. The program is funded by a $10 billion loan from the U.S. Export-Import Bank and approximately $2 billion in private-sector financing, according to CBS News. It covers cobalt, graphite, silicon, copper, nickel, titanium, lithium, and rare earth elements.
Rare earth mining stocks jumped following the announcement, with CNBC reporting that the stockpile is intended to protect private-sector manufacturers from supply disruptions and price volatility. Minerals will be procured from domestic and international sources and stored in a network of warehouse facilities across the United States. As of 2024, the U.S. relied entirely on imports for 12 critical minerals and imported more than 50 percent of 29 others.
The Implementation Challenge
Analysts caution that announcements and agreements are only the beginning. Tom Moerenhout of Columbia University’s Center on Global Energy Policy wrote that achieving genuine supply chain security requires the partnership to expand into a broader G7 and allied framework featuring shared financing, stockpiling, and offtake mechanisms that can match China’s operational coherence with collective capacity. The current bilateral arrangement, he argued, lacks the scale and coordination mechanisms necessary to address systemic dependencies on Chinese processing.
The timeline for building alternative supply chains is measured in years, not months. Mining projects typically require seven to fifteen years from discovery to production. Refining and magnet manufacturing facilities take three to five years to build and qualify. China spent decades and invested heavily to reach its current position; replicating that infrastructure across allied nations demands sustained political commitment and patient capital.
Japan brings a structural advantage to this effort. Its state-backed Japan Organization for Metals and Energy Security, known as JOGMEC, has decades of experience in upstream resource investment and public-private coordination. The four projects announced on March 19 represent Japan’s model applied to American geography, combining Japanese industrial expertise with U.S. mineral deposits and defense demand.
Whether the price floor mechanism can survive contact with market realities is an open question. Setting floors high enough to incentivize Western production without triggering inflation in downstream industries like automaking and electronics manufacturing will require careful calibration. And the suspended Chinese export controls, set to potentially resume in November 2026, could reshape the entire market calculus overnight.