China widened its trade dragnet on Japan Monday, adding 20 more entities, including units of Mitsubishi Electric, Mitsubishi Heavy Industries and Komatsu, to its export control blacklist. The timing undercuts Beijing's argument that Tokyo has nowhere else to turn. Three days earlier, Canada wrapped up its largest-ever trade mission to Japan with a pointed pitch: build the next critical minerals supply chain with Ottawa instead.
International Trade Minister Maninder Sidhu, who led roughly 300 delegates from nearly 175 Canadian companies and organizations to Tokyo last week, told Reuters that Canada and Japan are now discussing joint mining ventures, off-take agreements and even shared stockpiles of minerals like graphite and gallium. “We’re offering Japan that avenue to do more with Canada,” Sidhu said.
He pointed to a deal already moving: Nouveau Monde Graphite’s offtake agreement with Panasonic Energy, which locks in years of anode material supply from NMG’s Quebec project for Panasonic’s battery lines. The two companies expanded that agreement last fall to cover potentially all of NMG’s future Phase 2 output, a sign of how far Japanese manufacturers will go to lock down graphite that doesn’t run through China.
The numbers from the mission back up the talk. Sidhu said Japanese and Canadian firms signed more than C$1 billion, or US$705 million, in deals during the trip. Global Affairs Canada put the full week’s haul at 14 commercial deals worth over $1.7 billion, a record for a Canadian trade mission.
Japan has reason to keep listening. The country has trimmed its reliance on Chinese rare earths to around 58% of imports, down from a peak near 90%, but that’s still enough leverage for Beijing to keep squeezing. China did this once before, briefly cutting off rare earth shipments to Japan in 2010 over a dispute near the Senkaku Islands. The current standoff traces to a November comment from Prime Minister Sanae Takaichi suggesting a Chinese attack on Taiwan could trigger a Japanese military response, a line that enraged Beijing and set off a slow-building campaign of trade retaliation that hit a fresh entity list this week.
Energy is part of Canada’s pitch, too. Sidhu said he discussed widening the country’s partnership with Mitsubishi, a 15% stakeholder in LNG Canada’s Kitimat terminal, to send more gas to Japan. That conversation lands awkwardly for Mitsubishi, whose subsidiaries are now on Beijing’s blacklist alongside the rest of Monday’s additions.
The diplomatic backdrop helps Ottawa’s case. G7 leaders used their June summit in France to launch a critical minerals alliance aimed at keeping any single non-G7 supplier’s share of rare earths and magnets below 60% by 2030, with lithium and nickel picked as the first metals for coordinated stockpiling.
None of this unwinds China’s grip overnight. Beijing still controls about 70% of global refining capacity across the minerals the International Energy Agency tracks, and building Western alternatives will take decades and serious capital. But every name China adds to its export list gives Canada a stronger argument for why Tokyo should keep diversifying, starting with Ottawa.
By Michael Kern for Oilprice.com
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