China locked onto Japanese military fighters. How that could impact rare earths.

Subscribe to enjoy similar stories. Military tensions are increasing between China and Japan. Investors should take note.

It can become a rare earth story. Over the weekend, Chinese J-15 fighter jets locked onto Japanese F-15s, The Wall Street Journal reported. The aircraft were southeast of Japan’s Okinawa Prefecture.

The incident came days after Japanese Prime Minister Sanae Takaichi said that a Chinese attack on Taiwan could be a “survival-threatening situation" for Japan. For investors, military conflict can obviously impact aerospace & defense shares. In the case of China and Japan, new conflict could also disrupt rare earth metals markets, again.

Rare earths are a group of 17 rare earth elements, with names like neodymium, cerium, lanthanum, and praseodymium, which aren’t as well known as copper and industrial metals, but UBS calls them the “spice" of manufacturing. They are critical in modern technology, used in everything from iPhones, to EVs, and even in fighter jets. Some 390,000 metric tons of rare earth oxides were mined in 2024, up from 110,000 tons a decade ago.

China dominates rare earth production with an estimated 85% of global processing capacity. It has used its dominance in trade negotiations and conflicts with countries in the past, including Japan. In 2010, China briefly suspended rare earth exports to Japan over a East China Sea dispute.

Lately, China has been making it more difficult for companies to obtain export licenses for rare earth materials. In late October, President Donald Trump negotiated a rare earth-truce with China’s President Xi Jinping, ensuring rare earth materials would continue to flow from China. That is an American agreement though.