Japan, the world’s second-largest economy, may invest in African and Bolivian mineral projects after a revised law to help companies acquire overseas mining rights takes effect from July 1.
State-owned Japan Oil, Gas and Metals National Corp., or JOGMEC, said it can invest as much as 27.5 billion yen ($300 million) this fiscal year started April 1 in mining and minerals in collaboration with private companies and provide guarantees to fund projects. Under the current law, the agency can invest only in metal and mineral exploration projects.
The country faces increased competition from China, which spent a record $32 billion on mining and energy acquisitions last year, UBS AG said June 1. China Investment Corp., the nation’s sovereign wealth fund, said last year that it had $110 billion for overseas investments and that it would focus on commodities companies and property.
“Compared with China’s investment in mineral projects, JOGMEC’s is extremely small,” Shinya Yamada, an analyst at Credit Suisse Group AG, said today. “I don’t expect much,” he said.
JOGMEC wants to focus on projects in “Africa for platinum and base metals, including nickel, and Bolivia for lithium,” Hirobumi Kawano, president of the government agency, said in an interview yesterday.
Japan’s auto and electronics industries are among the world’s major consumers of metals such as platinum, indium, lithium and chrome that are used in mobile phones, computers, catalytic converters, liquid-crystal displays and so-called green technologies, including low-energy light bulbs.
Bolivia has the world’s largest untapped lithium reserve, containing enough of the lightest metal to make batteries for more than 4.8 billion electric cars, according to the U.S. Geological Survey. Mitsubishi Corp. and Sumitomo Corp. have been in talks with the Bolivian government to be partners in a project there.
The law will “enable us to invest overseas mines that are already in production,” Kawano said. “This is a significant improvement to secure stable raw material supplies,” he said. JOGMEC typically sells its rights in overseas mining projects to domestic companies within five years, he said.
In addition to JOGMEC, the Japan Bank for International Cooperation, a unit of government-owned Japan Finance Corp., provides support for overseas mining projects. The New Energy and Industrial Technology Development Organization supports overseas projects for coal.
“Getting this law ready is more important than the size of investments,” Masami Iijima, president and chief executive officer at Mitsui & Co, said June 2. “It’s just a start and may expand in the future.”