Fri, Sep 24, 2010 - Page 4 News List

China denies rare earth ban on Japan

FRICTIONWhile reports of a ban couldn’t be confirmed, researchers said Beijing could cut rare earths and other exports to Japan if the spat over the Diaoyutais escalates

REUTERS , BEIJING

A Chinese trade official yesterday denied a New York Times report that China had banned exports of rare earths to Japan following the arrest of a Chinese trawler captain near the disputed Diaoyutai Islands (釣魚台).

The report, which was sourced to unnamed industry experts, said an initial trade embargo on all exports of rare earth minerals would last through the end of this month.

“China has not issued any measures intended to restrict rare earth exports to Japan. There is no foundation for that,” said Chen Rongkai (陳榮凱), a spokesman for China’s Ministry of Commerce.

“I don’t know how the New York Times came up with this, but it’s not true. There are no such measures,” Chen said.

This week, Chinese Premier Wen Jiabao (溫家寶) threatened retaliatory steps against Japan unless it released the trawler captain, whom Tokyo accuses of ramming two Japanese coastguard ships.

Major rare earths traders in China and Japan said they had not heard of any ban. One Japanese trade official said he had heard rumors of an embargo, but could not comment further.

Rare earths, a group of 17 metallic elements including yttrium and lanthanum used in small ­quantities to enhance batteries, computer and weapons systems, and other applications, are generally found together.

China is the dominant source of rare earths, accounting for 97 percent of world supply last year. Steep cuts in export quotas for the second half of this year mean that total export quotas for this year are about 40 percent below last year’s levels.

“Rare earths export quotas were cut pretty sharply and have been basically used up, you can’t export any to Europe or the US either. People think it’s about Japan, but it isn’t,” said Bruce Zhang (張曉鑫), a rare earths expert at consultancy Asian Metal.

“This has nothing to do with the fishing boat incident. The export quotas were issued long before that,” he said.

China has gradually over several years reduced exports of rare earths and some minor metals through a quota system designed to keep more of the minerals for its own industry. That effort has been undermined by smuggling, especially through Vietnam.

The trawler dispute, which analysts say is largely a row over energy resources beneath the sea around the disputed Diaoyutai or Senkaku islands, has heightened tensions between Asia’s biggest economies.

Beijing has suspended high-level contacts with Japan over the issue and postponed talks on increasing flights between two countries with close business and trade ties.

Japanese prosecutors have until Sept. 29 to decide whether to bring charges against the captain.

Chinese media have quoted researchers as speculating that cutting rare earths and other exports to Japan would be an option open to China, if the spat escalates.

“Japan has a great need for these resources from China, reducing or restricting resource exports to Japan would be a useful measure,” the Global Times newspaper cited Ministry of Commerce researcher Tang Chunfeng (唐淳風) as saying.

Rare earth miners in Canada, Australia and elsewhere are citing the reduction of supply from China when seeking financial backing for their own projects, leading some industry experts to project that any supply squeeze will be short-lived.

Also this week, hundreds of workers at a unit of Japanese-owned Synztec Precision Parts (Shenzhen) Co went on strike for higher pay, the Hong Kong Apple Daily yesterday quoted Shenzhen television as saying.

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