Japan's state-owned JOGMEC, tasked with ensuring minerals and energy security, and gas firm Iwatani said on Monday they will invest up to 110 million euros ($120 million) in a French rare earths refining project to diversify procurement.

The move is part of efforts by Japan and its allies to strengthen the supply chains of critical minerals, essential for electric vehicles (EVs) and other advanced technologies, while cutting dependence on China.

In a joint statement, the Japan Organization for Metals and Energy Security (JOGMEC) and Iwatani said they would provide up to 110 million euros in equity and debt financing to Caremag, a unit of France's Carester.

The investment would go through a joint venture, Japan France Rare Earths, they added, but gave no timeframe and declined to comment on the size of their stakes in Caremag.

They have also signed a long-term offtake contract with Caremag to secure half its output of heavy rare earth oxides, primarily dysprosium and terbium, used in magnets for EV motors, offshore wind turbines and electronic components.

Caremag is building a rare earth refining plant in France's southwestern region of Pyrenées-Atlantiques, which is expected to produce more than 1,000 metric tons of rare earth oxides mainly from recycled magnets.

Initially it will also process mining concentrates, however.

Its production capacity include 500 tons of dysprosium and 90 tons of terbium, a JOGMEC official said.

The deal is expected to secure about 20% of Japan's future demand for the two minerals, an industry ministry official said. Japan now relies mostly on China for supply of the two minerals.

The investment support from JOGMEC is its first for a stand-alone refinery project, made possible by the revision of the JOGMEC Act in the fiscal year 2020.

Iwatani, which has been importing rare earths and supplying them to the Japanese market since the 1990s, aims to strengthen the rare earth supply chain.

Earlier on Monday, the Nikkei business daily said Japan's government planned to invest in Carester's rare earths project, while the French government would also provide about 100 million euros in financial support.