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China protecting strategic interests with rare earths policy
by Staff Writers
Xiamen, China (AFP) Oct 24, 2010

Japan urges China to normalise rare earth exports
Tokyo (AFP) Oct 24, 2010 - Japan has urged China to normalise rare earth exports after shipments were blocked last month during a diplomatic spat, Trade Minister Akihiro Ohata said Sunday. Ohata met with Chinese Commerce Minister Jiang Yaoping in Tokyo ahead of a forum on Japan-China cooperation in the fields of energy-efficiency and the environment. Ohata told reporters that he urged Jiang to "make improvements so that exports of rare earths will be carried out smoothly," amid continued interruptions caused by strict inspections by Chinese customs officials. Jiang told Ohata that China has strengthened shipping inspections to "counter smuggling" and reiterated China's claim that it has not imposed any ban on trade with Japan, the minister said.

Shipments of rare earth minerals to Japan were halted last month during a diplomatic row that began when Tokyo arrested a Chinese trawlerman in disputed waters. Japan's stockpile of rare earth minerals, used in the manufacture of high-tech goods, could dry up by March or April without fresh imports from China, a senior Japanese government official warned Thursday. China, which controls more than 95 percent of the global market, has not officially declared an export ban, but all 31 Japanese companies handling rare earth minerals have reported disruption to shipments. Japanese Prime Minister Naoto Kan is expected to raise the issue if he meets with Chinese Prime Minister Wen Jiabao on the sidelines of 16-nation Asian summit in Vietnam this week, media reports have said.

China's restrictions on exports of rare earths are aimed at maximising profit, strengthening its homegrown high-tech companies and forcing other nations to help sustain global supply, experts say.

China last year produced 97 percent of the global supply of rare earths -- a group of 17 elements used in high-tech products ranging from flat-screen televisions to iPods to hybrid cars -- but is home to just a third of reserves.

The United States and Australia have large reserves, 15 and five percent respectively, but stopped mining them because of cheaper Chinese competition and domestic environmental concerns.

"China is saying they're not interested in supplying the world's rare earths indefinitely," Geoff Bedford, vice-president of Canada-listed Neo Technologies -- a rare earth processor operating in China -- told AFP at an industry conference on the southeastern island of Xiamen.

"So they're showing signs of cutting back and they're expecting other mines to come in."

The world's top consumers of rare earths, especially Asian neighbour Japan, have rung the alarm bell in recent weeks, accusing China of disrupting exports of the vital minerals -- a charge Beijing has repeatedly denied.

Shipments have nevertheless been disrupted, and a top official in Tokyo has warned that Japan's stockpile could run out by March. Japan and Vietnam are now set to sign a deal on joint development of rare earth reserves.

Germany meanwhile said it will work with Tokyo to stimulate rare earths production in other nations including Mongolia, Namibia and the United States. Washington said it would raise the issue at next month's Group of 20 summit.

A commonly-held view among officials in Beijing is that rare earth policies in the past were like "selling gold to foreigners at the price of Chinese radishes", Damien Ma, an analyst at Eurasia Group, wrote in a research note.

Since 2006, China has cut export quotas on rare earths by five to 10 percent a year. Production has also been slashed amid concerns that Chinese supplies could run out in 15 years.

By cutting foreign supply and increasing the rare earths available to high-tech companies within China, Beijing is pushing its economy up the value chain, said Nigel Tunna, managing director of market analysis firm Metal-Pages.

"They've realised they need the things themselves and there is not as great value in exporting raw materials as there is in putting added value into them within China," said Tunna, whose firm organised last week's Xiamen conference.

"That has been the main driver behind the whole process."

About 40,000 tonnes of new non-Chinese supply is expected in coming years on top of the current 125,000-tonne annual supply, Bedford said.

That includes renewed production from California's Mountain Pass mine, which closed in 2002 after an industrial accident.

Japan, which uses a fifth of annual global supply, has budgeted 1.25 billion dollars -- equal to the total annual rare earths market value -- in 2011 to secure non-Chinese supplies, Advanced Material Japan Corp. said in Xiamen.

"We do not have a customer in Japan whose research and development group is not working overtime to figure how to reduce, or eliminate, rare earths in their products," Bedford told the conference.

"I'm not sure in the long term this is the best for the industry."

China's commerce ministry has said it reserves the right to slash rare earths exports again to "protect exhaustible resources and sustainable development" in an industry that is notoriously chaotic, with illegal mining rampant, and highly polluting.

"Over the past few years, rare earths exploration has been very messy and the environment has been very damaged," Jiang Fan, vice director-general of the ministry's foreign trade department, told AFP.

"The decrease of rare earths is not good for the world. I hope other countries can understand what China is doing."


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Japan and Vietnam to jointly develop rare earth: report
Tokyo (AFP) Oct 22, 2010
Japan and Vietnam are set to agree on joint development of rare earth minerals this month as countries scramble to secure supplies after a squeeze by China, a report said Friday. Japanese Prime Minister Naoto Kan and his Vietnamese counterpart Nguyen Tan Dung are expected to agree on the joint development plan in their meeting on October 31, with Japan providing exploration and smelting tech ... read more

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