Japan, the world's biggest importer of rare earths, will provide 5 billion yen ($65 million) in subsidies for projects that reduce the need for the elements as it aims to cut its reliance on imports to meet demand.
The funds will support projects that reduce consumption of magnet products that use dysprosium and neodymium, improve recycling and develop new technologies, according to a statement from the Ministry of Economy, Trade and Industry. An additional 3.5 billion yen will be allocated for use from May, according to the statement.
Dysprosium and neodymium are used in automotive and wind-power applications and electronics.
Japanese users of rare earths have tried to reduce their reliance on China, which produces more than 90 percent of the world's rare earths. The minerals are used in Apple Inc iPads, Boeing Co helicopter blades, Raytheon Co missiles, Toyota Motor Corp hybrid cars and wind turbines.
"After two years, we expect demand for dysprosium to be cut by about 200 metric tons and demand for neodymium by about 1,000 tons a year from this program," Kenichi Hasehira, an official at the ministry's nonferrous metals division, said on Thursday.
The ministry also expects to recover 13 tons of dysprosium and 69 tons of neodymium in fiscal 2015 from recycling, he said. Mitsubishi Materials Corp will manage the recycling project, ministry said in the statement. Out of 68 projects considered, the ministry approved funds for 49, it said.
Rare earths prices soared in 2011 after China moved to limit domestic output and slash export quotas in July 2010 by 40 percent. The Chinese government said it was leaving the 2012 overseas sales caps virtually unchanged.