Canada and Japan Sign Record C$1.7 Billion in Deals as China Tightens Its Export Blacklist
G7 partners accelerate midstream mineral processing ties as Beijing adds Japanese industrial giants to its export controls, testing Western supply chain alternatives.
China added 20 entities to its export control blacklist on Monday (2026-06-29), including units of Mitsubishi Electric, Mitsubishi Heavy Industries and Komatsu, deepening its trade squeeze on Japan just three days after Canada closed a record trade mission in Tokyo.6
Global Affairs Canada put that mission's total at 14 commercial deals worth more than C$1.7 billion — a record for a Canadian trade mission — while Trade Minister Sidhu separately counted Japanese and Canadian firm commitments of more than C$1 billion, or US$705 million, in commercial agreements.5,6
The bottleneck these deals are meant to address is not ore in the ground. About 90% of the world's capacity for refining rare metals sits in China, even though deposits are scattered across Australia, Brazil, Greenland and South Africa.1 Smelting and processing capacity is where the chokehold lies, and it is where Western governments are now directing attention.
Japan understands this better than most. In 2010, China imposed an unofficial ban on rare-earth exports to Japan during a dispute over contested islands, and Tokyo has since been the most active G7 state in building alternative supply networks. Australia and Canada are spending more than Europe on the problem, though largely focused on domestic production rather than midstream capacity abroad.2 The lesson Japan drew from that episode is that refining is a strategic asset.
Canada moved on multiple fronts ahead of the G7 leaders' summit in the week of 2026-06-15. Ottawa quietly offered its G7 partners priority access to its critical minerals stockpile, according to E&E News, which reported a letter from Canadian officials making the offer to allied governments.4 The stockpile diplomacy was paired with the Tokyo trade mission, which produced the record deal volume.
Those bilateral efforts sit inside a larger multilateral frame. The U.S., Japan, Australia and India launched a joint framework on Tuesday (2026-05-26) aimed at countering China's control of global mineral markets, committing to mobilize up to $20 billion in government and private-sector financing.3 The Quad's framework is a mobilization target, not a disbursement schedule, so the gap between pledged ambition and commissioned refining capacity remains wide.
The U.S. has moved on individual projects as well. In January, the government declared intent to provide $1.6 billion in backing for Round Top, a Texas rare-earth project, sending shares of its sponsor, USA Rare Earth, surging.2 One project, even a well-funded one, is a fraction of China's installed base.
Canada's own exposure makes the urgency clearer. The country's producers are ten times more reliant on Chinese inputs than their U.S. counterparts, a one-way dependency that shapes how Ottawa has framed both the stockpile offer and the Tokyo deals as defensive positioning as much as market development. China's deterrent capabilities, built on the credible threat of cutting supply to foreign buyers, are designed to exploit that asymmetry, as the Economist reported.1
The energy market read-through is indirect but concrete. Rare earths feed into permanent magnets used in wind turbines, EV drivetrains and grid equipment. Refining bottlenecks slow hardware deployment and compress long-dated electricity demand growth assumptions. A full Chinese embargo on rare-earth exports would trim roughly $3.1 billion a year from U.S. output, according to estimates in the Economist — a figure modest against GDP but concentrated on specific industrial supply chains.1
Canada's defence posture is layered onto the same infrastructure ambitions. Ottawa's Defence Industrial Strategy, built around a "build-partner-buy" framework, emphasises domestic capacity development with government equity participation in some cases.7 Critical minerals sit at the intersection of that defence push and the civilian energy transition, which is partly why the stockpile offer carried weight at the G7 summit.
The commercial deals signed during the Canadian mission are agreements, not construction starts. Joint stockpiling discussions between Canada and Japan have not produced procurement contracts. Beijing's decision to expand its export control list on Monday (2026-06-29) shows it is willing to keep testing how much leverage the 90% refining share still buys — and the answer, until new midstream capacity is built and commissioned outside China, is likely to remain: quite a lot.6,1