Canada Pitches Kitimat LNG to Japan as China Widens Trade Blacklist
Beijing's expansion of its export control list to include Mitsubishi units has sharpened Ottawa's case for redirecting more Canadian gas toward Japan.
China added 20 Japanese companies to its export control blacklist on Monday (2026-06-29), targeting units of Mitsubishi Electric, Mitsubishi Heavy Industries and construction equipment maker Komatsu in the latest escalation of Beijing's trade pressure on Tokyo. Three days earlier, on Friday (2026-06-26), Canada had wrapped a trade mission in which Mitsubishi's own energy arm sat at the centre of discussions about future gas supply.4
Mitsubishi holds a 15% stake in LNG Canada's Kitimat terminal in British Columbia. Canada's Minister of International Trade Aman Sidhu said he raised with Mitsubishi the possibility of widening the partnership to direct more Canadian gas volumes toward Japan — a conversation that gained urgency as the same conglomerate now faces tightening commercial restrictions from its largest geographic neighbour.4
The trade mission produced measurable commercial results. Japanese and Canadian companies signed more than C$1 billion, equivalent to US$705 million, in deals during the visit, Sidhu said. Global Affairs Canada put the full tally for the June 23-27 (week of 2026-06-23) mission at 14 commercial agreements worth over $1.7 billion, a record for a Canadian trade mission.4,3
The LNG discussions run alongside a wider strategic realignment. Canada and Japan are considering cooperation on critical mineral projects and potential coordinated stockpiling of key metals, as the two G7 economies work to reduce China's dominant position across supply chains, according to reporting from the week of June 23 (2026-06-23).3 Japan has trimmed its reliance on Chinese rare earths to around 58% of imports, down from a peak near 90%, but Beijing retains enough leverage to keep applying commercial pressure.4
G7 leaders used their summit in France earlier this month 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 prioritised for early coordination. Beijing still controls roughly 70% of global refining capacity across the minerals that the International Energy Agency tracks, a position that Western alternatives will take decades and significant capital to replicate.4
For Japan, LNG supply security is the more immediate pressure point. JKM front-month prices stand at $15.82 per MMBtu as of Monday (2026-06-29). Japan's September 2025 LNG import bill reached approximately $5.85 billion, a 164.2% year-on-year increase, while import volumes fell 1.6% to 5.32 million tonnes from 6.27 million tonnes in August, according to provisional Ministry of Finance data.2
JKM had risen to $18.96 per MMBtu in mid-May (2026-05-18), up 10.84% on the day, and climbed 58.46% year-on-year at that point, reflecting elevated spot market tension as utilities scrambled for supply.1 The current level of $15.82 represents a correction from those highs, but remains historically elevated relative to pre-2021 norms.
LNG Canada's Kitimat location offers shorter Pacific shipping distances to Japan and South Korea than US Gulf Coast facilities — a structural freight advantage that compounds when arb windows are thin.
What converts the Sidhu-Mitsubishi discussion into binding supply remains unclear. LNG Canada Phase 2 has not reached final investment decision, and long-term offtake contracts require years to negotiate and credit-rate counterparties on both sides. Mitsubishi's equity stake gives it volume entitlements from Phase 1, but expanding those to Japan under new terms means working against capacity already largely committed.4
The pace at which binding offtake agreements follow the June 23-27 (week of 2026-06-23) diplomatic groundwork will determine whether the C$1.7 billion trade mission announcement translates into contracted gas flows before Japan's utilities finalise their next procurement cycle.4