A year after India and Japan signed a critical minerals MoC in Tokyo, only Toyota Tsusho's Andhra Pradesh refining venture is running; Rajasthan rare earth talks remain preliminary and partly denied by Japan's METI.
At a glance
- India's Ministry of Mines and Japan's METI signed a critical minerals Memorandum of Cooperation on August 29-30, 2025, during PM Modi's Tokyo visit for the 15th India-Japan Annual Summit.
- Toyota Tsusho's Andhra Pradesh rare earth refining venture, running since 2012 with state-run Indian Rare Earths, remains the one concrete operating project tying the two countries' rare earth supply chains together.
- Japan is reportedly in preliminary talks to help explore Rajasthan and Gujarat hard-rock rare earth deposits estimated at 1.29 million tonnes of oxides, but METI's own deputy director has denied discussing specific corporate partnerships there.
- China escalated export controls against Japanese entities through 2026 -- a January ban linked to Taiwan remarks, 20 firms added to an export-control list and 20 more to a watchlist in February, expanding to roughly 40 entities by June.
What happened
On August 29-30, 2025, Prime Minister Narendra Modi travelled to Tokyo for the 15th India-Japan Annual Summit and, alongside Japanese Prime Minister Shigeru Ishiba, signed a Memorandum of Cooperation between India's Ministry of Mines and Japan's Ministry of Economy, Trade and Industry (METI) on critical minerals supply-chain resilience, covering processing technology, joint exploration and mining investment, and stockpiling. Thirteen months on, the concrete output remains limited to one operating project: Toyota Tsusho's rare earth refining venture in Andhra Pradesh, run through its subsidiary Toyotsu Rare Earths India alongside state-run Indian Rare Earths since 2012, which processes thousands of tonnes of rare earth oxides a year for export to Japan. A newer possibility -- Japan jointly exploring three hard-rock rare earth deposits in Rajasthan and Gujarat that India's mines minister G Kishan Reddy said hold an estimated 1.29 million tonnes of rare earth oxides -- remains at the talking stage; Reuters reported that METI deputy director Naoki Kobayashi denied discussions of any specific corporate partnership or technology-transfer arrangement in Rajasthan, and India's Ministry of Mines did not respond to requests for comment. The gap matters more now than it did in August 2025: China has escalated export controls on Japanese entities through 2026, from a January ban tied to remarks on Taiwan to a February action placing 20 Japanese firms on an export-control list and 20 more on a watchlist, expanding by June to roughly 40 entities including defence-linked and nuclear firms -- restricting Japanese access to Chinese-controlled rare earth and dual-use supply chains at the same time Tokyo is trying to diversify away from them.
The details
A year is long enough to judge whether a diplomatic pact has become anything more than a signing photo, and on that test, India and Japan's critical minerals cooperation is still mostly paperwork. The August 2025 Memorandum of Cooperation between India's Ministry of Mines and Japan's METI was specific about intent -- processing technology, joint exploration financing, stockpiling -- but the only project it can currently point to as evidence of delivery is Toyota Tsusho's Andhra Pradesh refining venture, and that predates the pact by well over a decade. Toyotsu Rare Earths India has been processing rare earth oxides with Indian Rare Earths since 2012; last year's summit deepened that existing relationship rather than creating something new.
The Rajasthan talks illustrate why the gap between plan and project is so persistent. G Kishan Reddy's announcement of three hard-rock deposits holding an estimated 1.29 million tonnes of rare earth oxides in Rajasthan and Gujarat is a genuinely new domestic resource for India to offer a partner. But Reuters' reporting that METI's own Naoki Kobayashi denied discussing specific corporate partnerships or technology transfer there shows the distance between a resource existing on paper and a financing-and-extraction deal existing on the ground. India's Ministry of Mines not responding to the same query only underlines that neither side has yet confirmed a bankable structure -- who funds the drilling, who owns the offtake, on what price terms.
That slow pace collides with a fast-moving problem. China's 2026 export-control campaign against Japanese entities -- beginning with a January ban tied to a prime ministerial comment on Taiwan, expanding to 20 companies on a control list and 20 more on a watchlist by February, and reaching roughly 40 entities including defence and nuclear-linked firms by June -- is precisely the kind of supply disruption the August 2025 MoC was designed to hedge against. Japan does not have years to wait for Rajasthan exploration talks to mature into an operating mine while Beijing tightens the valve on existing supply routes.
None of this means the bilateral relationship lacks structure. India and Japan sit together in the Quad Critical Minerals Initiative, the Mineral Security Partnership and the Indo-Pacific Economic Framework, and their 2025 summit adopted a ten-year strategic framework spanning eight priority areas including economic security. Institutional scaffolding is not the missing ingredient -- capital committed to a specific mine, refinery or offtake agreement is. Until a second Toyota Tsusho-scale project breaks ground, the honest description of India-Japan critical minerals cooperation is still frameworks first, tonnes second.
Why it matters
India holds real rare earth potential -- 6.3% of global reserves, plus newly announced Rajasthan and Gujarat deposits -- but converts very little of it into refined material, while Japan has capital, refining technology and an urgent need to diversify away from a Chinese supply chain Beijing has shown it will restrict over unrelated political disputes. The Toyota Tsusho model already proves the combination works commercially; the question this past year has tested is whether it can be replicated faster than China can escalate its next round of export controls. For India specifically, closing that plan-to-project gap would mean less dependence on the 90% import share it currently carries for rare earth element requirements, while for global markets it would add a genuinely new, non-Chinese processing node to a supply chain that remains heavily concentrated.
Our read
Outlook: neutral. This is a story about the pace of bilateral institution-building and project delivery rather than a supply or demand shock -- the one operating project (Toyota Tsusho's Andhra Pradesh venture) predates the news, and the Rajasthan talks remain preliminary and partly denied by Japan's own ministry, so there is no new confirmed rare earth supply to price in either direction yet.
What to watch
- Whether India's Ministry of Mines confirms any government-to-government structure for Japanese involvement in the Rajasthan and Gujarat rare earth deposits
- Any expansion of Toyota Tsusho's or another Japanese firm's processing capacity in India beyond the existing Andhra Pradesh venture
- Further escalation or easing of China's export controls on Japanese entities through the remainder of 2026
- Progress reports under the Quad Critical Minerals Initiative and Mineral Security Partnership on India-Japan-linked projects specifically
For information only, not investment advice.
Neodymium price in India
metalscost.com India reference price as of 2026-10-03.
Detailed analysis
Timeline
- 2012-01-01: Toyota Tsusho and Indian Rare Earths establish a rare earth refining joint venture in Andhra Pradesh.
- 2025-08-29: India's Ministry of Mines and Japan's METI sign a Memorandum of Cooperation on critical minerals supply-chain resilience during PM Modi's Tokyo visit for the 15th India-Japan Annual Summit.
- 2026-02-24: China adds 20 Japanese entities to an export-control list and 20 more to a watchlist, part of an escalating campaign tied to remarks on Taiwan.
- 2026-06-29: China widens its export-control watch list on Japanese entities to roughly 40, including defence-linked and nuclear firms.
- 2026-09-22: East Asia Forum analysis argues India and Japan have yet to convert their critical minerals frameworks into new bankable projects beyond the existing Andhra Pradesh venture.
Supply Drivers
India currently meets roughly 90% of its rare earth element requirements and 80% of its lithium and cobalt requirements through imports, despite holding 6.3% of global rare earth reserves and newly identified hard-rock deposits in Rajasthan and Gujarat estimated at 1.29 million tonnes of rare earth oxides -- a resource base that remains largely unconverted into refining or extraction capacity beyond the single long-running Toyota Tsusho-Indian Rare Earths venture in Andhra Pradesh.
Government Policies
India's Ministry of Mines and Japan's METI signed a Memorandum of Cooperation on August 29-30, 2025 covering processing technology, joint exploration investment and stockpiling, alongside a ten-year, eight-priority-area strategic framework adopted at the same summit -- institutional commitments that have not yet translated into a new joint project beyond the pre-existing Andhra Pradesh refining venture.
Geopolitical Risks
China escalated export controls on Japanese entities through 2026 -- a January ban linked to remarks on Taiwan, 20 firms added to an export-control list and 20 more to a watchlist in February, and roughly 40 entities covered by June, including defence and nuclear-linked firms -- directly restricting Japanese access to Chinese-controlled dual-use and rare earth supply chains and raising the urgency of Tokyo's diversification efforts with India.
Mining Production
India's mines minister G Kishan Reddy has announced the discovery of three hard-rock rare earth deposits in Rajasthan and Gujarat with an estimated 1.29 million tonnes of rare earth oxides, though Japan's METI has denied discussing specific corporate partnerships or technology-transfer terms for jointly exploring them.
Refinery Output
Toyotsu Rare Earths India, a joint venture between Toyota Tsusho and state-run Indian Rare Earths operating in Andhra Pradesh since 2012, processes thousands of tonnes of rare earth oxides annually for export to Japan and remains the only bilateral refining project of scale between the two countries.
What could lift prices
- China's escalating 2026 export controls on Japanese entities give both governments a concrete, urgent reason to accelerate delivery on their August 2025 MoC rather than let it remain aspirational.
- India's newly announced Rajasthan and Gujarat deposits, at an estimated 1.29 million tonnes of rare earth oxides, give the partnership a genuinely new resource base beyond the existing Andhra Pradesh venture.
- The Toyota Tsusho-Indian Rare Earths model already demonstrates a working commercial template that a second, larger project could replicate.
What could weigh on prices
- Thirteen months after the MoC was signed, the only operating bilateral project predates the agreement by over a decade, and Japan's own METI has denied discussing specific partnership terms for the Rajasthan deposits.
- India's Ministry of Mines did not respond to requests for comment on the Rajasthan talks, suggesting no confirmed government-to-government deal structure yet exists for that opportunity.
Country impact
| Country | Impact | Reason |
|---|---|---|
| India | Medium | India holds newly identified rare earth deposits and an existing refining partnership with Japan, but converts little of its resource base into processing capacity, leaving it reliant on imports for around 90% of rare earth requirements. |
| Japan | High | Escalating Chinese export controls through 2026 have made Japan's diversification away from Chinese rare earth and dual-use supply chains urgent, making delivery on the India MoC's stated goals a live economic-security priority rather than a long-term aspiration. |
| China | Medium | China's export restrictions on Japanese entities are the direct backdrop pushing Japan toward alternative rare earth partners like India, even as China remains the dominant global processor of rare earth materials. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Electric Vehicles | Positive | Rare earth magnets are essential to EV motors, and any expansion of non-Chinese processing capacity through India-Japan cooperation would add a diversification option for automakers currently exposed to Chinese supply-chain risk. |
| Electronics | Positive | Rare earth elements are core inputs for electronics manufacturing, and Japan's push to secure supply through India directly serves its electronics and precision-manufacturing sectors' need for stable, non-Chinese sourcing. |
Who gains, who loses
- Toyota Tsusho: As the operator of the one established bilateral rare earth refining venture, Toyota Tsusho holds a first-mover position if India-Japan cooperation expands into new projects.
- Indian Rare Earths: The state-run company's existing Andhra Pradesh partnership with Toyota Tsusho positions it as the natural Indian counterpart for any new joint exploration or processing venture.
- Japanese manufacturers awaiting diversified rare earth supply: With China's export controls escalating faster than new India-Japan projects have materialized, Japanese firms dependent on rare earth inputs continue to face concentrated exposure to Chinese-controlled supply chains.
Other ways this could play out
- If Japan's diversification urgency from China's export controls translates into committed financing for Rajasthan exploration, a second bilateral rare earth project could move from talks to construction within the next few years.
- If the Rajasthan discussions remain at the preliminary stage METI has described, India-Japan critical minerals cooperation could continue to rest primarily on the pre-existing Andhra Pradesh venture and broader multilateral frameworks like the Quad Critical Minerals Initiative rather than new bilateral projects.
Price risks
- Continued delay in converting India-Japan frameworks into new projects could leave Japan more exposed to further Chinese rare earth export restrictions, a risk that would weigh more on Japanese manufacturers than on rare earth prices directly.
- If Rajasthan exploration talks stall entirely, India's rare earth import dependence -- currently around 90% -- is likely to persist near current levels rather than decline.
Historical comparison
- 2012 vs. 2025-26: Toyota Tsusho's Andhra Pradesh rare earth venture, established in 2012, remains the primary concrete output of India-Japan rare earth cooperation more than a decade later, even after the two governments signed a dedicated critical minerals Memorandum of Cooperation in August 2025.
Technical view
Price is trading above both its 20-period and 50-period moving averages, a bullish alignment.
Computed from metalscost.com's own stored price history.
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