Over the weekend of July 4–5, 2026, an article like this was published in China's state-run Global Times. The article was based on an interview with the director of the Beijing-based Cutting-Edge Technology Research Institute. Right from the headline, it asserted that "Japan's plan to recycle rare earth minerals from AC units is unfeasible and reveals its weak points". It is clear from the headline that it is downplaying Japan. This article covers the "rare earth recycling" project, which was announced in a press release by Japan's Mitsubishi Electric and reported by Japanese media outlets, including the Nihon Keizai Shimbun.The claim is that Japan has established a so-called "fully circular system" for the first time, extracting rare earths from discarded home appliances and feeding them back into its own products. As China tightens export controls on rare earth-related technologies and items, citing potential military diversion, a red alert has been triggered for Japan's high-performance permanent magnet supply chain. Stepping in as a relief pitcher is Mitsubishi Electric, a major Japanese home appliance and defense company. Mitsubishi Electric has partnered with materials and refining specialists such as Shin-Etsu Chemical and Eco Advance to establish a "closed-loop recycling" system completed entirely within Japan. The specific process is as follows: First, a partner company of Mitsubishi Electric separates the "compressor," a core component, from discarded air conditioner outdoor units collected in accordance with the Home Appliance Recycling Act. In the next step, a company called Eco Advance safely extracts high-performance magnets from the motors inside the separated compressors. In the third step, Shin-Etsu Chemical, a leading Japanese chemical company, melts these magnets to cleanly separate and refine four key rare earth elements, including neodymium, contained within them. The core of the plan is for Mitsubishi Electric to then use these recovered rare earths to manufacture new air conditioners.
According to the press release, Mitsubishi Electric projects that this technology will allow it to self-supply up to 35% of the specific rare earth demand required for manufacturing air conditioners. If successful, it comes close to an ideal model of "urban mining," extracting critical resources from discarded home appliances without digging up any ground. Consequently, Japanese media celebrated this, calling it "an innovative breakthrough to counter China's weaponization of resources." However, China's Global Times views this rare earth recycling project with a highly skeptical and critical eye. And they do have their reasons. First and foremost, China points out the "cost-effectiveness". The amount of rare earths extracted per air conditioner is only a few grams to tens of grams. The cost of collecting, dismantling, and chemically refining them would be incomparably more expensive than importing processed minerals from China. Thus, the Global Times pointed out, "This method is difficult to apply to mass production systems, and the scale is far too small to be a game-changer for the entire market." Second is China's confidence, which spans both rare earth mining and refining. China controls more than 90% of the supply chain not only for mining rare earths globally but also for the "refining" stage that processes them for actual use. This is an ecosystem built steadily over many years, absorbing massive environmental pollution costs and labor expenses. Underpinning the article is the calculation that Japan's recycling of a few air conditioners can never match the unit cost of the massive rare earth ecosystem China has established. There also seems to be an intent to keep Japan in check. As mentioned briefly earlier, Mitsubishi Electric is not a company that only makes civilian home appliances. It is a key Japanese defense contractor that manufactures fighter jets, missiles, and radars. China believes Japan has a hidden agenda to build military and security self-sufficiency under the pretext of "civilian recycling". That is why China is exerting verbal pressure, arguing that it is a recycling business with low cost-effectiveness and that no matter how many rare earths are extracted from air conditioners, only light rare earths are recovered, while heavy rare earths are not. Japan's arduous self-sufficiency efforts and China's resource hegemony competition, which seeks to coldly suppress them, hold highly significant implications for South Korea. We consulted Dr. Han Yo-sep of the Korea Institute of Geoscience and Mineral Resources (KIGAM). He explained that while China's argument is correct if we only look at cost-effectiveness, such projects are not undertaken based on the return on investment. In normal times, recycling discarded home appliances might seem like pouring water into a bottomless vessel, and the effects may be negligible. However, if the supply chain is completely paralyzed due to diplomatic conflicts or wartime situations, resources cannot be obtained no matter how much money is offered. Therefore, he emphasized that even if it incurs costs now, we must establish a technological foundation and an "urban mining ecosystem" to self-circulate a certain percentage of key resources from waste, just as Japan is doing, to avoid being held hostage as a nation. Just as important as importing minerals is the proprietary technology that allows them to be distributed and used across various industrial sectors. The reason Japan can hold its ground despite Chinese pressure is that global materials companies like Shin-Etsu Chemical possess world-class refining technologies. Of course, South Korean state-run research institutes, such as KIGAM, have also already developed proprietary technologies to separate and refine high-purity rare earths from waste magnets or minerals. We have caught up significantly, even when compared to Japan, a leading nation. However, the problem is that we have not "scaled up" these technologies to a factory level. Building a large-scale refining plant requires massive capital, as well as bearing the costs of treating the enormous amount of wastewater and environmental pollutants generated during the refining process. Because companies have been reluctant to invest due to low economic feasibility, there are virtually no large-scale commercial refining facilities in South Korea. While there are companies that ultimately manufacture permanent magnets, the middle stage of the supply chain is missing. Consequently, even with the technology, we currently suffer from a structural vulnerability where we have no choice but to import raw materials from China or semi-finished raw materials processed in Japan. This is why experts point out that we must make bold investments in core materials technologies, such as battery recycling and waste motor refining technologies. We cannot afford to just stand by and watch the rare earth war between China and Japan. If we have no resources to mine, making technology our mine is our path to survival.