Japan seeks Australian resources for electric-car batteries and rare earths

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【Summary】Japan is seeking to source battery minerals and rare earths directly from Australia and Canada to reduce its reliance on China. The Japanese government has been in discussions with officials from both countries, citing their shared caution against China. Japan's efforts come as the US pushes for "China-free" supply chains. Other manufacturing nations like South Korea have also been securing minerals from Australia and Canada.

FutureCar Staff Oct 05, 2023 11:15 PM PT

Japan seeks Australian resources for electric-car batteries and rare earths

Japan is exploring alternative sources for battery minerals and rare earths for its electric cars, aiming to reduce its reliance on China. According to Nikkei Asia, Japanese government ministers have been in talks with officials from Australia and Canada to establish direct supply chains. This move comes as the US encourages manufacturing nations to develop supply chains independent of China.

A Japanese official stated that Australia and Canada are ideal partners for Japan as they share similar concerns about China. In June, representatives from Japan visited Australian officials, and last month, Japan's trade minister and officials from battery companies traveled to Canada for discussions. This meeting marked the first time in a decade that such talks took place on Canadian soil.

However, Japan is not the only country seeking to secure battery minerals from Australia and Canada. South Korea, among other manufacturing nations, has also been pursuing these resources.

Despite Australia being home to more than half of the world's lithium, the majority of lithium materials are refined and processed in China, according to the International Energy Agency. In May 2023, the US Government reclassified Australian mining companies as "domestic" suppliers, allowing them to receive funding under the US Defence Production Act. Furthermore, the US offers a tax credit of $US7500 ($AU11,770) to local electric car buyers, on the condition that the battery materials are sourced from the US or its allies, and the battery itself is manufactured in North America.

By diversifying its sources for battery minerals and rare earths, Japan aims to reduce its dependence on China and establish more reliable supply chains for its electric car industry.

Ben Zachariah, an experienced writer and motoring journalist from Melbourne, is an expert in the field of classic car investment. With over 15 years of experience in the automotive industry and an MBA in Finance, Ben brings valuable insights to the industry.