Key Takeaways
- Japan is set to commence test mining for rare-earth-rich mud from the deep seabed in early 2026, aiming to establish a domestic supply and reduce its critical reliance on foreign imports, particularly from China.
- China Vanke (000002.SZ, 2202.HK), a prominent Chinese property developer, has been downgraded to 'SD' (Selective Default) by S&P Global following a completed distressed debt restructuring, and has been removed from CreditWatch.
- This dual development underscores a global pivot towards securing critical resources amidst geopolitical tensions and highlights the persistent financial instability plaguing China's once-booming real estate market.
Japan is poised to embark on a groundbreaking initiative in early 2026, launching test mining operations for rare-earth-rich mud from the deep seabed. This ambitious government-backed project, situated off Minamitori Island, approximately 1,900 kilometers southeast of Tokyo within Japan's exclusive economic zone, seeks to extract vital minerals such as dysprosium, neodymium, gadolinium, and terbium from depths of 5,000 to 6,000 meters. The primary objective is to secure a stable domestic supply of these critical elements, thereby lessening Japan's dependence on imports and bolstering national security.
The Japan Agency for Marine-Earth Science and Technology (JAMSTEC) will operate a deep-sea exploration vessel for the test mining, which represents the world's first attempt to extract and refine rare earths from abyssal mud within a national EEZ. If successful, the project aims to scale up to trial operations capable of recovering 350 tonnes of mud per day by January 2027. This strategic move could significantly reshape global rare-earth supply chains and alter existing geopolitical dependencies in the commodity market.
Meanwhile, in China, real estate giant China Vanke (000002.SZ, 2202.HK) has been hit with a 'SD' (Selective Default) rating from S&P Global, a direct consequence of a recently completed distressed debt restructuring. The rating agency has also removed the developer from CreditWatch, signaling a definitive stage in its financial woes. This development follows earlier downgrades by S&P Global to CCC- from CCC in late November, citing the company's "unsustainable" financial commitments and weak liquidity.
China Vanke's financial distress has been characterized by a looming bond maturity wall, with approximately 11.4 billion yuan (US$1.6 billion) in debt maturing between December 2025 and May 2026, alongside forecasts of negative operating cash flow. The company had been actively seeking to delay onshore bond repayments and reportedly received guidance from Beijing for a "market-oriented approach" to its debt, a euphemism for restructuring. The situation at China Vanke, once considered a bellwether for the Chinese property sector and partially state-backed by Shenzhen Metro, has reignited concerns about the broader stability of China's real estate market, which has been in a prolonged slump since 2021. A potential default by Vanke could have a more significant impact than previous high-profile defaults by private developers like Evergrande and Country Garden.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.