China Restarts Rare Earth Shipments to Japan

HONG KONG — China resumed exports of crucial minerals to Japan on Friday for the first time in almost two months, Japanese government officials and an industry executive said.

Chinese customs agents were not only processing the paperwork for shipments of the minerals, known as rare earths, but were also allowing dock workers to load containers of rare earths on ships bound for Japan on Friday afternoon, the Japanese officials and the executive said.

“Everything is flowing,” said the rare earth industry executive, who insisted on anonymity because of lingering diplomatic sensitivity about the Chinese embargo, which Beijing had never announced or formally acknowledged.

But an official at another company said that delays persisted for its shipments, a difficulty that suggested not all export restrictions had been lifted.

Although China had allowed shipments of the minerals to resume to the United States and Europe after a brief suspension in late October, deliveries to Japan had remained suspended — even after Chinese custom agents had started processing the shipping paperwork a few weeks ago.

But Japan’s ministry of economy, trade and industry said Friday that 16 of 27 companies that imported rare earth minerals from China had reported in a survey over the last three days that their ability to buy them had improved.

Tsutomu Murasaki, director of the trade ministry’s nonferrous metals division, said Friday that some loading of ships with rare earths had begun, after China gave customs approval Wednesday, Reuters reported from Tokyo.

Akihiro Ohata, Japan’s trade minister, said that the improvement was consistent with assurances he had received during a meeting last weekend in Yokohama with Zhang Ping, the chairman of China’s National Development and Reform Commission.

China produces 95 percent of the world’s rare earths and half of its exports of these minerals go to Japan, which uses them in its high-tech manufacturing industries.

Rare earths are vital to the production of a wide range of industrial products, including automobiles, glass, oil refining, computers, smartphones, wind turbines and flat-screen televisions. The military needs them for missiles, sonar systems and the range finders of tanks.

Officials at the General Administration of Customs in Beijing declined to accept questions over the telephone on Friday about rare earth policy, saying that any questions would have to be faxed. When questions were faxed, officials did not respond.

China’s decision to resume shipments to Japan may be more than simply a sign of warming relations between Beijing and Tokyo.

Many factories in China assemble products that require high-tech components from Japan that use rare earths. Some of these factories, which employ large numbers of workers in China, have begun running low on components as Japanese suppliers ran short on some of the more obscure rare earths needed to manufacture them, two rare earth industry executives said.

Electronics industries have been affected, particularly camera manufacturers, leading to a desperate scramble for raw materials that has even included buying tons of obscure rare earth compounds from corporate stockpiles in Europe and airlifting them to Japan.

All 32 of the authorized rare earth exporters in China have refused to increase their shipments to other countries during the unannounced ban on shipments to Japan, making it difficult for Japanese traders to obtain supplies indirectly.

As a result of the blocked shipments, some rare earths now cost up to 10 times as much outside China as inside; the Chinese government has started a vigorous campaign to prevent this from leading to smuggling.

Chinese customs officials abruptly halted the processing of paperwork for shipments bound for Japan on Sept. 21. The shipments were halted during an acrimonious dispute over Japan’s detention of a Chinese fishing trawler that rammed two Japanese coast guard vessels two weeks earlier near islands long controlled by Japan but claimed by China.

Japan quickly released the captain after China engaged in what Japanese officials described as economic warfare. Government officials in Japan reportedly have said that Japanese companies had rare earth stockpiles that could last through March. But there are 17 different rare earth elements that in turn are processed into a wide range of chemicals that are hard to replace and are produced at different levels of purity. Making sure that every Japanese company had enough of every chemical compound of the correct purity for its manufacturing applications has become more difficult as the Chinese interruption in shipments has dragged on.

Chinese customs officials halted some shipments of raw rare earths to the United States and Europe from Oct. 18 to 28, after the Obama administration opened an investigation into whether China was violating international free trade rules with its green energy policies, including China’s restrictions on rare earth exports. But the United States in particular mostly buys processed rare earth materials from China and Japan, and was little affected.

The resumption of shipments may not last long. China has cut its rare earth export quotas by 40 percent this year, to 30,300 tons. Industry executives estimate that only 3,000 to 4,000 tons worth of quota remain to be exercised this year, which means that shipments could stop again in several weeks and not resume until quotas are issued for 2011.

The Chinese government did not issue initial 2010 quotas until Dec. 31, 2009, but it has hinted that it will act sooner this year so as to allow time for exporters to make logistical arrangements for shipments to resume in early January.

China briefly resumed the processing of customs paperwork for rare earth exports three weeks ago, a day before a meeting in Hanoi of top Chinese and Vietnamese officials. But when that meeting went poorly, Chinese port officials prevented containers from being actually loaded aboard vessels regardless of whether the customs forms had been completed.