October 1, 2010 / 5:32 AM / in 7 years

UPDATE 2-Japan min: mulling starting rare earth stockpile

* Ministry studying which rare earth minerals to include

* But will not buy minerals until prices stabilise

* Min:China started issuing rare earth export licenses (Adds background, quotes)

By Risa Maeda

TOKYO, Oct 1 (Reuters) - Japan is considering starting a stockpile of rare earth as a buffer against interruptions to usual commerce, its trade minister said on Friday, in the wake of China’s de facto ban on exports of the minerals to the country.

Tokyo also announced measures such as supporting companies in shifting away from or recycling rare earth, in reaction to reports of an export halt following the arrest of a Chinese trawler captain near disputed islands last month and China’s announcement in July that it would slash its export quota by 40 percent. [ID:nLDE68Q1OV]

China accounts for about 97 percent of the world’s total production of rare earth, vital for electronics and auto parts, and around half of this is exported to Japan.

“We’re considering a stockpile of rare earth minerals ... and studying prices and supply and demand situations,” Akihiro Ohata said at a regular news conference on Friday.

The trade ministry has started considering which rare earth minerals should be in the stockpile as it is not practical to hold all 17 types, a ministry official said.

Industry sources had cited concerns that Beijing was apparently holding back shipments to Japan, although a Japanese trading firm source said earlier this week that China had ended the de facto ban. [ID:nTOE68S07W]

Ohata confirmed some rare earth shipments have been sent to Japan from China.

“We have information that the Japan-bound shipments of one company are moving (towards Japan),” he said.

He added he had heard that China had started accepting new applications for licenses for rare earth exports to Japan and that there were signs of improvement in customs inspections.

HOLDING OFF

But Japan will wait until prices stabilise before stepping into the market, said Yuko Yasunaga, an official in the trade ministry’s mineral and natural resources division.

State-run Japan Oil, Gas and Metals National Corp (JOGMEC) and companies in Japan already hold strategic reserves of cobalt, chromium, gallium, indium, manganese, molybdenum, nickel, tungsten and vanadium.

“We have a system for reserves and have identified the nine types as strategic,” a JOGMEC official said. “But we don’t disclose whether we have stockpiles for other types.” (Additional reporting by Chikako Mogi, Editing by Joseph Radford)

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