Japan Looks to Mongolia for Rare Earths

Sunday, October 3, 2010

Kan Mongol

Tokyo -- Taking advantage of the growing bilateral trade partnership, Japan has agreed with Mongolia to prioritize rare earths production in future months and years. The agreement came when Prime Minister Naoto Kan met Mongolian Prime Minister Sukhbaataryn Batbold yesterday night.

Tokyo and Ulan Bator had previously been discussing an expansion of the Japanese role in the development of Mongolian coal, copper, and uranium, but the recent crisis in the Japan-China relationship and the brief embargo on the exports of rare earths imposed by Beijing has awakened Japanese leaders to their vulnerability in this sphere and put the rare earths question near the top of the economic agenda.

Under the terms of the deal just reached, Japan will help Mongolia prospect for rare earths in return for technology transfers. Japan will receive priority in deliveries of any rare earths produced as a result of the joint efforts.

Rare earths consist of seventeen elements such as neodymium, dysprosium, yttrium, cerium, and samarium, many of which are needed for the production of a number of hi-tech products.

At present, China produces about 97% of the world's rare earth supplies, although only about 36% of the world's reserves are concentrated there. Beijing, unlike other countries, has prioritized the production of these elements since the mid-1980s.

This means that former Chinese leader Deng Xiaopeng's maxim that, "The Middle East has oil; China has rare earths," is only partly correct.

In addition to Mongolia, METI officials are said to be looking for new supplies of rare earths in countries such as Kazakhstan and Vietnam in order to diversify supplies away from China.

There has been a flurry of high-level bilateral visits between Japan and Mongolia in recent months, including the visit of then-Foreign Minister Katsuya Okada to Ulan Bator in late August.

On several occasions this year, Okada expressed Japan's interest in playing a larger role in the exploitation of Mongolia's natural resources.

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