Japan to Increase Rare-Earth Imports From Mongolia, Asahi Says

By Yusuke Miyazawa

Oct. 3 (Bloomberg) -- Japan, the world’s biggest importer of rare earths, plans to buy more of the minerals from Mongolia to reduce dependence on China, the Asahi newspaper reported.

Prime Minister Naoto Kan and his Mongolian counterpart Sukhbaatar Batbold met yesterday in Tokyo and agreed to begin an effort to locate rare-earth mines, with test drilling to start in November, the newspaper said, without saying where it got the information.

Japan depends on China for 90 percent of its rare-earth supply and aims to cut that proportion to 70 percent, the report said. China controls more than 95 percent of the global supply of the minerals, which are used in radar, high-powered magnets, hard drives in laptop computers, catalytic converters for vehicles, electric-car batteries and wind turbines.

China imposed a de facto ban on exports of the minerals to Japan last month, Japanese Economy Minister Banri Kaieda said Sept. 28, as ties between the two nations soured over the detention of a Chinese boat captain whose ship collided with two Japanese Coast Guard vessels in disputed waters.

Chen Rongkai, a spokesman for China’s Ministry of Commerce, said Sept. 28 the nation didn’t impose any export ban.

China slashed its exports of rare earths to 7,976 metric tons in the second half of this year from 22,283 tons in the first half and 28,417 tons a year earlier, according to Japan’s Trade Ministry. Japanese demand for the minerals was estimated at 20,518 tons in 2009, down from 32,064 tons in 2008, it said.

Toyota, Honda

China ended the effective ban on rare-earth exports to Japan late last month when it began accepting customs applications, the Asahi newspaper reported Sept. 29, citing unidentified Japanese companies.

Japan accounts for 65 percent of Chinese rare-earth exports, according to a Sept. 24 report by Macquarie Group Ltd. Prices for the metals have risen this year with surging demand and cuts to China’s export quotas, affecting automakers such as Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co., which require the elements for vehicle development, Macquarie said.

Japan’s Trade Ministry plans to assist in developing technologies and alternative materials to reduce or replace minerals such as cerium, used in polishing glass for hard-disk drives and as a catalyst to reduce car emissions, the ministry said Oct. 1.

--Editors: Terje Langeland, Paul Tighe

To contact the reporter on this story: Yusuke Miyazawa in Tokyo at ymiyazawa3@bloomberg.net

To contact the editor responsible for this story: Jim McDonald at jmcdonald8@bloomberg.net

Source:Bloomberg Business Wire service