Japan, U.S. to sign agreement on critical minerals for EV batteries

Japan and the United States plan to sign an agreement that will reinforce supply chain resilience for critical minerals used in electric vehicle batteries that will allow Japanese to receive U.S. tax credits, Japan's industry minister said Tuesday.

Under the U.S. Inflation Reduction Act ratified last August, a certain amount of critical minerals in the batteries of EVs manufactured in North America must be sourced or processed either domestically or from free trade agreement partners. The latest agreement will relax regulations and treat Japan as equivalent to such a trade partner in relation to the minerals.

Economy, Trade and Industry Minister Yasutoshi Nishimura told reporters that EVs using critical minerals collected or processed in Japan will fulfill requirements for the U.S. tax credits.

"The agreement is aimed at building resilient supply chains in cooperation with the United States, as well as like-minded nations, to secure critical minerals indispensable to the production of EV batteries, with demand for them expected to expand significantly further," Nishimura said.

Details about the tax credits and the changes to be made are to be announced by the U.S. Treasury Department soon, according to the industry ministry.

Japan and European countries have previously protested about being excluded from joining the American Clean Vehicle Credit program, with Tokyo submitting a letter to the U.S. government in November calling for the program's requirements to be eased.

© Kyodo News