Editor’s Note
This article discusses a potential U.S.-Japan collaboration on synthetic diamond production, a critical material for semiconductors, under a major bilateral investment framework.
TOKYO, Jan 27 (Reuters) – A plan to produce synthetic diamonds within the United States has emerged as a strong candidate for the $550 billion (approximately ¥85 trillion) investment and financing into the U.S. based on the Japan-U.S. tariff agreement, sources familiar with the matter said. Synthetic diamonds are a critical material for economic security, essential for semiconductor manufacturing and other industries. Both governments are considering announcing this project, along with several others such as power generation-related ventures, as the “first case,” potentially even before Prime Minister Sanae Takaichi’s planned visit to the U.S. in late March.
Multiple sources involved in the negotiations revealed the details. One source explained to Reuters:
According to multiple sources, the synthetic diamond project involves Element Six Holdings (ESH), a group company of De Beers, the world’s largest diamond mining and distribution company.
Synthetic diamonds are an indispensable critical material for economic security, used for slicing semiconductors and polishing automotive and electronic components. Currently, they are primarily manufactured in China but, similar to rare earths, are positioned as subject to export controls, making stable procurement a challenge for both Japan and the U.S. Japanese companies’ involvement in the U.S. domestic production effort, as buyers or through technical cooperation, would also demonstrate Japan-U.S. cooperation in strengthening supply chains.
The Japan-U.S. joint fact sheet on investment issued last October listed, as a project involving ESH, “construction of a high-pressure, high-temperature diamond abrasive manufacturing facility. Considering involvement from Japanese suppliers and offtakers (buyers).” The envisioned project scale is $5 billion.
In addition to this, large-scale power generation projects are also expected to be included in the “first case.” Multiple sources acknowledged that Hitachi Ltd’s (6501.T) participation in such a project is envisioned. The method of involvement and the envisaged investment amount are not known. Reuters also reported this month that a large-scale infrastructure project for data center construction involving SoftBank Group (9984.T) remains a final candidate.
Japan’s Ministry of Economy, Trade and Industry (METI) told Reuters, “Nothing has been decided at this point, so we cannot comment. We are in discussions with the U.S. to swiftly form projects” (Americas Division, Trade Policy Bureau). Hitachi commented, “We are having various discussions with both the Japanese and U.S. governments, but we refrain from answering regarding details.” ESH stated, “We recognize that synthetic diamonds play an important role in supporting many industrial sectors, but no formal agreements have been concluded for any projects at this time.” Requests for comment were also made to the U.S. Department of Commerce and the U.S. Embassy in Japan, but no responses have been received at this time.
According to METI, a consultation committee to narrow down Japan-U.S. investment projects has been held four times so far. Participants include METI, the Ministry of Foreign Affairs, the Ministry of Finance, the Japan Bank for International Cooperation (JBIC), and Nippon Export and Investment Insurance (NEXI) from Japan, and the U.S. Department of Commerce, the Department of Energy, and others from the U.S. Ministers, including METI Minister Ryosuke Akazawa and U.S. Commerce Secretary David Ratnik, attended two of these meetings. Following consultations by an investment committee composed solely of the U.S. side, former President Trump will make the final decision on the projects.