Hatoyama to Lobby Vietnam on Obtaining Rare Earth Supplies, Atomic Project

Japan’s former Prime Minister Yukio Hatoyama will lead a delegation to Vietnam to discuss obtaining rare earth supplies and lobby for nuclear and rail contracts, an official in his office said.

Hatoyama will leave for Vietnam tomorrow, Daisuke Haga, Hatoyama’s parliamentary secretary for policy said. Nine other officials will join the trade delegation, he said. A meeting is planned with Prime Minister Nguyen Tan Dung on Oct. 25 in Hanoi, said a Vietnamese National Assembly official who can’t be named because he isn’t authorized to speak to the media.

Japan is seeking alternative supplies of rare earth metals after China, which controls more than 90 percent of world supply, cut export quotas of the materials used in Toyota Motor Corp. hybrid cars as well as disk drives and batteries. Prime Minister Naoto Kan’s government set aside an unspecified amount of money to find new sources of the metals in a stimulus plan on Oct. 8. Nikkei English News reported the rare earth fund may be as much as 100 billion yen ($1.2 billion).

The delegation will also be lobbying for companies led by Tokyo Electric Power Co. to be awarded a contract to build an atomic power station and for Vietnam to choose Japan’s bullet- train technology for its planned high-speed railway network, Haga said. Vietnam in August agreed to seek technical support from Japan to conduct a feasibility study for bullet trains to link major cities.

Rare Earth Shortage

Japan may have a shortage of about 10,000 tons of rare earths next year, or more than 30 percent of the country’s annual demand, according to Sojitz Corp., a trading house that imports most of the nation’s supply.

Toyota Tsusho Corp., a trading company affiliated with Toyota Motor, formed a joint venture with Sojitz and a Vietnamese state-run mining company to import rare earths to Japan from 2012, Katsutoshi Yokoi, a Tokyo-based spokesman, said. Showa Denko K.K., the world’s second-biggest hard-disk maker, opened a rare-earth plant in Vietnam in May this year.

“Companies typically stockpile around a half-year’s worth of rare earth supply, so they should be okay for now,” said Shinya Yamada, a Tokyo-based equity analyst covering manufacturing companies at Credit Suisse Group AG.

“It is feasible they might not be able to get anything out of China until the end of this year and if exports don’t resume next year, we will see trade issues involving the World Trade Organization, leading to economic friction,” he said.

‘Behind Schedule’

Showa Denko declined to say how much rare earths they stockpile. Shipments from China are “behind schedule,” Junichi Tagaki, a Tokyo-based spokesman said.

The company makes rare-earth alloy at two plants in China and plans to produce 800 tons of rare-earth metals in Vietnam this year for making neodymium-magnets, Tagaki said.

Neodymium-magnets are the most powerful magnets available, according to the website of supplier United Nuclear Scientific LLC. The magnets are used in machines used by the healthcare industry and in electricity generators.

Tokyo Electric, Toshiba Corp., Hitachi Ltd., Mitsubishi Heavy Industries Ltd. and partners will start a joint venture on Oct. 22 to supply atomic reactors to Vietnam and other developing countries. Japan wants to boost a stagnating economy by exporting technology for power generation, so-called smart power grids and high-speed railways.

Nuclear Power Plants

Vietnam said on June 22 it plans to build as many as 13 nuclear power plants with a capacity of 16,000 megawatts by 2030. Russia’s state-owned Rosatom Corp. was selected to build Vietnam’s first atomic power station, the Vietnam Agency for Radiation and Nuclear Safety said on June 17.

Hatoyama, who promoted Japanese nuclear and rail technology while he was prime minister for eight months through June, wrote to Dung in February to support Japanese companies bidding for the next Vietnamese atomic power station. Dung responded in a letter that Vietnam will give “maximum, serious consideration” to Japan’s technology.

State Secretary for Foreign Affairs Takeaki Matsumoto is among the officials visiting Vietnam, Haga said. Japan’s foreign ministry and the Vietnamese National Assembly’s external affairs department declined to comment.

Yoshikatsu Nakayama, vice minister of economy trade and industry, will travel to Vietnam on Oct. 23, the trade ministry said in a statement yesterday. The ministry wouldn’t confirm who else was traveling to the southeast Asian nation.

Meetings will be held at the ministries of transport, trade and industry, science and technology, and natural resources and environment, the Vietnamesee official said.

To contact the reporters on this story: Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net

To contact the editor responsible for this story: Amit Prakash in Singapore at aprakash1@bloomberg.net.

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