China to Speed Up Exports of Rare Earths, Japan Says

China, the world’s largest producer of rare-earth metals, will speed up exports of the minerals after delays disrupted supply, according to Japan’s Trade Minister Akihiro Ohata.

“I got the impression that this will be resolved soon,” Ohata told reporters on Nov. 13 after meeting his Chinese counterpart, Zhang Ping, at the Asia-Pacific Economic Cooperation forum in Yokohama. China has instructed officials to accelerate inspections of rare earth exports, Ohata said after his meeting with Zhang.

Rare-earth prices have surged as much as sevenfold after China in July reduced its second-half export quota by 72 percent to ensure domestic supply of the minerals, used by companies including Toyota Motor Corp. and Vestas Wind Systems A/S., the world’s largest wind turbine maker.

Zhang, head of China’s National Development and Reform Commission, said the country has about one-third of the world’s rare-earth deposits, yet ships about 97 percent of global supply, risking depletion of its reserves in 10 to 15 years. China’s customs’ officials have ramped up export inspections to reduce smuggling, which siphons off 20 percent to 30 percent of output, the Chinese Society of Rare Earths said last week.

China’s Ministry of Commerce in September denied imposing a ban on exports to Japan, the world’s biggest user of rare earth metals. Calls to the ministry’s media enquiry’s number today were not immediately answered. For the full-year, China cut the export quota by 40 percent to 30,258 tons, said Chen Zhanheng, the head of research at the Chinese Society of Rare Earths.

Free Trade

Zhang and Ohata spoke as leaders of APEC’s 21 economies, which account for more than 50 percent of the global economy and almost 45 percent of its trade, were meeting in Yokohama to discuss issues affecting the global economy.

Their meeting followed the Nov. 11-12 Group of 20 summit in Seoul that “opposed protectionist trade actions” while failing to agree on a remedy for trade and investment distortions.

The potential shortage of rare earths from China prompted companies including Greenwood, Colorado-based Molycorp Inc. to announce plans to restart and develop mines to make up the supply shortfall. German Chancellor Angela Merkel called for expanded production in Eastern Europe and Central Asia as an alternative supply.

Tanks and Radars

In addition to hybrid vehicles and wind turbines, rare- earth metals are used in Lockheed Martin Corp. radars and General Dynamics Corp. tanks. The term rare earth applies to a group of 17 chemically similar metal elements including cerium, lanthanum and neodymium.

China plans to set up strategic reserves for 10 metals including rare earths, according to a report by the Ministry of Land and Resources’ newspaper posted on the department’s website today. The 10 metals include rare earths, tungsten, antimony, molybdenum, indium, germanium, gallium, tantalum, zirconium and tin, according to the report.

Japan’s stockpiles of rare earths may run out as early as March, Agence France-Presse cited Yoshikatsu Nakayama, vice minister of economy trade and industry, as saying on Oct. 21.

The disruption of shipments to Japan came around the same time that a Chinese fishing boat collided with two Japanese Coast Guard vessels near islands claimed by both sides in the South China Sea, leading to speculation that China was reducing exports in retaliation.

New Supply

Japan is diversifying its sources of rare earths following the flare-up of tensions over the uninhabited islands, known as the Senkaku in Japanese and Diaoyu in Chinese, Foreign Minister Seiji Maehara said in an interview last month.

Sovereignty over the area includes rights to undersea natural gas and oil reserves and China and Japan have yet to implement a 2008 agreement to jointly develop the gas fields.

China’s Commerce Minister on Oct. 20 pledged to maintain supplies of rare earths and said there was no embargo on shipments.

In a meeting with Chinese President Hu Jintao at the APEC forum, Japanese Prime Minister Naoto Kan “conveyed Japan’s firm stance” on the disputed islands, according to Tetsuro Fukuyama, Japan’s deputy chief cabinet secretary.