October 22, 2010 / 3:20 AM / 10 years ago

UPDATE 1-Japan, Vietnam to co-develop rare earths - Nikkei

* Kan, Dung to meet Oct 31 on rare earth cooperation-media

* Former PM Hatoyama heading to Vietnam on Friday

* Sumitomo, Sojitz in Vietnam rare earth feasibility study (Adds former PM Hatoyama’s trip to Vietnam)

TOKYO, Oct 22 (Reuters) - Japan is set to agree with Vietnam later this month on the joint development of rare earth metals to reduce its dependence on China for the strategic minerals, the Nikkei business daily reported.

Former Japanese Prime Minister Yukio Hatoyama will leave for Vietnam on Friday to discuss possible cooperation in rare earths and infrastructure development with Vietnamese Prime Minister Nguyen Tan Dung and other ministers, Hatoyama’s office said.

The agreement will be reached when current Japanese Prime Minister Naoto Kan and Dung meet in Hanoi on Oct. 31, according to the Nikkei.

Concerns are simmering that Beijing is holding back shipments of rare earth minerals that are vital for the production of electronics goods and auto parts.

Sino-Japanese relations deteriorated sharply last month after Japan detained a Chinese trawler captain whose boat collided with Japanese patrol ships near a chain of disputed islands — called Senkaku in Japan and Diaoyu in China.

China accounts for about 97 percent of the world’s total production of rare earth elements, about half of which are exported to Japan.

Japanese trading house Sojitz Corp (2768.T) said it is conducting an advanced feasibility study for rare earth development in Vietnam. Sumitomo Corp (8053.T), another trading firm, said it is in the early stages of a feasibility study on rare earth development in Vietnam.

The Nikkei said Sumitomo aims to start rare earth shipments to Japan from Vietnam as early as 2013, while Toyota Tsusho Corp (8015.T) is also preparing for rare earth development in the country.

Kan and Dung are also expected to agree on cooperation for the construction of nuclear power plants and high-speed railways in Vietnam, the paper said.

Hatoyama and nine other lawmakers are travelling to Vietnam on their own accord, and the trip is not intended to lay the groundwork for the reported agreement between the two nations, Hatoyama’s office said. (Reporting by Kiyoshi Takenaka, Yuko Inoue; Editing by Joseph Radford and Chris Gallagher)

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