by Staff Writers
Tokyo (AFP) Sept 24, 2010
China blocked rare earth exports to Japan days before Tokyo's decision Friday to free a Chinese boat captain whose detention sparked the worst diplomatic row between the sides in years, traders said.
Beijing denied reports it had prevented shipments of the rare minerals that many of Japan's top exporters, such as the world's biggest automaker Toyota, rely on to make cutting-edge products ranging from car batteries to computers.
But traders in Tokyo said that China had blocked exports to Japan of key minerals by slowing down administrative procedures in ports in Shanghai and Guangzhou to prevent materials being loaded on ships.
"We heard from our officials in China that the shipping of rare earths (to Japan) was suspended on September 21," a spokesman for Japanese trading house Sojitz in Tokyo told AFP.
Japan on Friday said it would release a Chinese fishing boat captain arrested earlier this month after a collision between his trawler and two Japanese coastguard vessels in a disputed area of the East China Sea.
The move was hoped to help ease tensions that had dramatically risen in recent days, with Chinese leaders threatening "further measures" against Tokyo if the captain was not immediately released.
But China reiterated Friday that Japan's detention of the captain had been "illegal and invalid".
Another trader from a different trading house who wished to remain anonymous also said Beijing was blocking exports to Japan of rare minerals, underlining China's control of a market crucial to some of the world's biggest companies.
"We heard from our Chinese trading partners that exports of rare earths to Japan are being stopped," the trader said, adding that Beijing had directly encouraged firms to slow or stop exports.
"On September 22, Chinese companies who have licences for exporting to Japan were gathered in Beijing by China's commerce ministry. There were discussions of stopping (rare earth) exports to Japan," he said.
China's commerce ministry on Thursday denied a report in the New York Times that cited industry sources as saying Beijing had blocked exports of rare earth minerals to Japan.
Japan's minister for economy, trade and industry Akihiro Ohata said Friday that the government was aware trading houses had reported a suspension of rare earth exports, adding it was still confirming the information.
China supplies at least 95 percent of the world's rare earths. It had previously placed restrictions on exports of the minerals, sending market prices soaring and sparking concern among foreign governments and companies.
Previous media reports said the country was considering banning the export of certain elements and closing mines.
Foreign companies and governments fear Chinese control will deny them access to the metals used to make everything from hybrid vehicles to energy-saving lightbulbs, missiles and wind turbines, forcing manufacturers to shift their plants to China.
Market prices of some types of rare earth metals have soared more than 20 percent since China announced in July that it planned to reduce global shipments.
Last month, before the row erupted, Japan had urged China to expand rare earths exports.
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