From Fox News:
By hosting a high-tech facility that would convert spent fuel into a plutonium-uranium mix designed for the next generation of reactors, Rokkasho was supposed to provide fuel while minimizing nuclear waste storage problems. Those ambitions are falling apart because years of attempts to build a "fast breeder" reactor, which would use the reprocessed fuel, appear to be ending in failure.
But Japan still intends to reprocess spent fuel at Rokkasho. It sees few other options, even though it will be extracting plutonium that could be used to make nuclear weapons.
My comment: One problem is that plutonium is among the most toxic substances known to man. Some plutonium reportedly leaked from the Fukushima Plant after the tsunami and meltdown. Another problem is the proliferation risk. China would gladly take the plutonium off of Japan's hands, but China would almost certainly use it in warheads.
There is an obvious but politically unpopular solution: The world would be a safer place if Japan had its own nuclear weapons instead of relying on America's nuclear shield. Unfortunately, their Constitution prohibits it.