Japan Urges Cooperation, Dialogue With China on Rare Earths

Japan, the world’s biggest importer of rare earths, wants international cooperation for alternatives, conservation, diversification and recycling and to continue dialogue with China to secure stable global supply.

“The supply chain of rare-earth related products is connected globally,” Keiro Kitagami, vice minister at the Ministry of Economy, Trade and Industry, said at the EU-Japan- U.S. conference on critical materials in Tokyo today. “Problems with rare earths are a common global challenge.”

The 17 chemically similar metallic elements are used in applications ranging from wind turbines to guided missiles and hybrid car batteries. The conference comes two weeks after the U.S., the European Union and Japan filed a complaint at the World Trade Organization on March 13 about Chinese limits on exports. China, which accounts for at least 90 percent of global supplies, has curbed output and exports since 2009.

“Through this trilateral workshop, we can recognize the importance of broader international cooperation among consumer countries such as EU, the U.S. and Japan and resource countries such as Canada and Australia,” Kitagami said. Japan, the U.S. and France are major importers from China and produce intermediate materials or products using rare earths, he said.

China’s export controls on raw materials are aimed at protecting resources and the environment, Shen Danyang, a spokesman for the Ministry of Commerce, said on March 15. Such controls conform to WTO rules, he said.

China Dialogue

“It is also important for all of us to continue dialogue with China,” Kitagami said. “We are ready to cooperate with China in environmental protection, if this indeed is the real reason for reducing exports.”

Japan’s trade ministry also provides financial support to rare earth recycling projects and supports the development of new mines and refineries outside China, Kitagami said.

“Although the consumption rate of rare-earth elements used in areas such as next-generation automobiles and wind power plants, has been decreasing, the total amount of consumption is forecast to increase due to worldwide growth of green industries,” he said.

The U.S. Energy Department said in January that limited supplies of five rare-earth minerals -- dysprosium, terbium, europium, neodymium and yttrium -- pose a threat to increasing use of clean-energy technologies such as wind turbines and solar panels. While prices of rare earths fell in the second half of 2011, they remain volatile, leading some companies to search for ways to consider reducing reliance on the minerals, the Energy Department said.

Demand for rare earths may rebound following a 25 percent slump in prices this year, Morgan Stanley said on March 5. That would benefit producers of the metals such as Molycorp Inc. (MCP), which owns the largest rare-earth deposit outside of China, located near Mountain Pass, California.

To contact the reporters on this story: Jae Hur in Tokyo at jhur1@bloomberg.net; Ichiro Suzuki in Tokyo at isuzuki@bloomberg.net

To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net

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