Japan Says No Sign China Resumed Rare Earth Exports, Aims to Press Issue

Japan said it has no evidence China resumed exports of rare-earth metals, which were disrupted last month during a territorial dispute that soured relations between Asia’s two largest economies.

“As of yesterday, there is no information about new cargo movements,” Chief Cabinet Secretary Yoshito Sengoku told reporters in Tokyo. “The Japanese government intends to use every opportunity to ask China to improve the situation regarding export restrictions.”

Sengoku’s comments come after the New York Times reported that China yesterday ended an unannounced embargo on exports of rare earths to the U.S., Europe and Japan. While customs officials allowed shipments to resume to all three destinations, those to Japan face extra scrutiny and delays, the report said, citing four industry officials it didn’t identify. China had blocked exports to Japan since Sept. 21, and to the U.S. and Europe on Oct. 18, the New York Times said.

China’s customs bureau said today there has never been a cutoff in outbound shipments of rare earths, a group of 17 chemically similar metallic elements including cerium and europium. China has been reviewing export licenses and other paperwork for rare-earth shipments, according to a statement read by an official in the bureau’s news office who declined to be identified. China in July said it was cutting export quotas for rare earths by 72 percent for the second half of the year.

Environmental Damage

Prices of rare earths have climbed as much as sevenfold in the past six months. China controls more than 90 percent of world supply, leading Japan, the U.S. and Germany to seek new supplies. Greenwood, Colorado-based Molycorp Inc. and Sydney- based Lynas Corp. plan to open rare-earth mines in the U.S. and Australia in the next two years.

China’s Commerce Minister on Oct. 20 pledged to maintain supplies of rare earths and denied suggestions there was an embargo on shipments.

The export cuts are related to environmental and conservation efforts, Chinese Foreign Minister Yang Jiechi told his Japanese counterpart Seiji Maehara today in Hanoi, according to Japan’s Deputy Press Secretary Noriyuki Shikata.

Japanese Prime Minister Naoto Kan, who is attempting to set up a meeting with Chinese Premier Wen Jiabao at a regional summit in the Vietnamese capital today, set aside funds to find new sources of the metals in a stimulus plan announced earlier this month.

Verifying Reports

Japan is contacting companies to verify reports that China has resumed the export of rare-earth minerals, Shikata said.

“It takes a few days if there is a change of policies and a change in the way export licenses are approved,” he said. “It takes time before we can confirm everything is back to business as usual.”

Yoji Sato, executive vice president of Tokyo-based Sojitz Corp., a trading company, said disruptions are continuing and the company is looking to diversify its sources of rare earths. The company plans to begin importing them from Vietnam starting in 2012.

“We understand that matters dealing with shipping still aren’t going smoothly in China,” Sato said. “We do believe that the delay in exports will eventually be cleared.”

Clinton, Obama

U.S. Secretary of State Hillary Clinton on Oct. 27 called on China to clarify its policy on rare-earth minerals following the reports of export curbs. The issue may arise when President Barack Obama meets Chinese counterpart Hu Jintao on Nov. 11 at the start of a meeting of Group of 20 leaders, said Jeff Bader, senior director for Asian affairs on the National Security Council.

Chinese foreign ministry officials have repeatedly said they hope to improve ties with Japan after a ship collision in disputed waters sparked a diplomatic stand-off. Japan detained the Chinese captain of a fishing boat for two weeks after it collided with Coast Guard vessels on Sept. 7, near islands known as Senkaku in Japan and Diaoyu in China.

--Takashi Hirokawa, Li Yanping, Michael Forsythe, Daniel Ten Kate, Ichiro Suzuki. Editors: Ben Richardson, Bill Austin.

To contact the reporters on this story: Takashi Hirokawa in Tokyo at thirokawa@bloomberg.net

To contact the editor responsible for this story: Bill Austin at billaustin@bloomberg.net

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