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Japan Signs Rare Earth Deal with India

By Ag Metal Miner | Thu, 22 November 2012 23:11 | 0

Japan has sealed its new “friendship” in the world of rare earths by formally signing a Memorandum of Understanding (MoU) with India for imports of rare earth (REE) minerals annually.

The agreement signed last Friday will allow Japan to import about 4,100 tons of rare earths per year from India, probably from next spring.

Once upon a time, Japan used to rely almost 100% on China for its supply of rare earth minerals, a crucial component in mobile phones, hybrid cars and missile guidance systems.

The imports from India will take care of about 10 percent of Japan’s peak annual demand. A joint venture between Japan’s Toyota Tsusho Corp. and India’s state-run Indian Rare Earths Ltd. will be in charge of monitoring the new deal.

A statement by India’s external affairs ministry released subsequent to the signing of the deal said the conclusion and signing of the agreement would further enhance and strengthen the India-Japan strategic and global partnership.

The MoU was supposed to be signed during Indian Prime Minister Manmohan Singh’s visit, which was cancelled at the eleventh hour after the Japanese government decided to dissolve the lower house of parliament for an election next month. Instead, it was inked by Japanese Foreign Minister Koichiro Gemba and India’s Ambassador to Japan Deepa Wadhwa in Tokyo.

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According to a report in The Indian Express, Japan was well on its way to diversifying its sources of rare earths from China. Outside of India, Tokyo expects to get half its supplies of the elements from countries other than China from the middle of next year, according to Trade Minister Yukio Edanor.

The Japanese moves come after China had held back some shipments of rare earth elements over a year ago following tension between the two neighbours over the disputed ownership of a string of small islands in the East China Sea.

The Japanese moves come after China had held back some shipments of rare earth elements over a year ago following tension between the two neighbors over the disputed ownership of a string of small islands in the East China Sea.

Besides India, Japan was also planning to import 400 tons from Kazakhstan and 9,000 tons from Australia in 2013, according to a Japanese Trade Ministry official.

MetalMiner has been tracking the new bonhomie between Japan and India on the rare earth front since July this year. In October, MetalMiner had reported the news that Japan and India were actively thinking of striking up a new relationship on the rare earth minerals supply front. The November MoU was the formal step taken in that direction.

For both Japan and India, this new cooperation has opened up a new “front” against China.

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For India especially, it will not only mean “cocking a snook” at its one-time adversary and now active trade partner, China, it will also mean re-booting an industry which it had once led from the front ranks.

Despite having lesser reserves than the US and other nations, India has always been a far larger producer of rare earths. Almost all the leading rare earth mineral-producing countries including India were, however, done in because of cheap imports from China.

India had also lost out because of the protectionist environment that had forced its critical industries to depend on high-technology imports. This new MoU will also give a new life to the Indian Rare Earths Limited (IREL), a Public Sector Undertaking, set up in the early 1950s.

In a related development, agency reports here said the Inner Mongolia Baotou Steel Rare Earth Group Hi-Tech, China’s largest producer of light rare earths, had announced it would suspend production for a month to try to stabilize falling prices.

The move is similar to the one made by the company in October last year for the same reason.

By. Sohrab Darabshaw

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