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2 Japan goes
prospecting for rare
metals By Hisane Masaki
TOKYO - In addition to oil, natural gas
and uranium, resource-poor Japan is now revving up
its drive to secure rare metals, which are used in
a wide range of high-technology products,
including digital home appliances, high-grade
steel, and hybrid and fuel-cell cars.
Highly alarmed by soaring prices on robust
global demand and amid increased export
restrictions by some producing countries, the
Ministry of Economy, Trade and Industry (METI)
mapped out a
new comprehensive strategy
recently for ensuring stable supplies of rare
metals, especially tungsten, cobalt, vanadium,
molybdenum, indium, platinum and rare earth, in
the medium and long terms.
For Japan, a
major importer of these rare metals, ensuring
their stable supplies has emerged as an
all-important policy task to maintain and
strengthen the international competitiveness of
its industries.
The strategy calls for,
among other things, beefing up state stockpiles of
rare metals in terms of both volume and scope,
promoting the recycling of scraps, developing
alternative materials, extending official
development assistance (ODA) for the development
of new mines, and pumping public funds into
efforts to help domestic private firms land mining
interests abroad. The strategy also calls for
strengthened relations with producing countries
through such foreign-policy tools as free-trade
agreements (FTAs).
Meanwhile, private
Japanese companies are aggressively looking for
chances to step up their rare-metal exploration
projects. Last week, for example, major trading
house Sumitomo Corp announced that it has invested
about 3 billion yen (US$24.4 million) to acquire
an 8.7% stake in Augusta Resource Corp, a Canadian
metals-exploration company.
Augusta is
carrying out a feasibility study at the Rosemont
copper project about 50 kilometers southeast of
Tucson, Arizona, which holds deposits of copper,
silver and molybdenum - a rare metal used mainly
as an additive to create specialty steel products.
Sumitomo said in a statement that it aims to build
up a long-term partnership with Augusta for the
development of the Rosemont project.
Global rush amid rising
prices Global competition is intensifying
for non-ferrous metals, including copper and lead,
as well as for such energy resources as oil,
natural gas and uranium. Prices have risen sharply
in recent years on increased global demand, led by
red-hot consumption in China. The surge in prices
in international markets has been fueled by the
inflow of speculative funds.
Japan has
even seen a bizarre series of theft cases recently
in which copper and electric wires, bronze fire
bells, faucets, manhole covers and incense burners
have been stolen from streets, rice fields and
cemeteries across the country. It is widely
suspected that high international metal prices and
special procurement demand in China ahead of next
year's Summer Olympic Games in Beijing are behind
the thefts.
Spikes in prices for
non-ferrous metals are not limited to such base
metals as copper, lead and aluminum. Prices for
most rare metals, which are widely used as raw
materials for high-tech products, have also jumped
several-fold in recent years.
Indium, for
example, was sold at prices 8.5 times as high this
March as in March 2002. Indium is used in such
products as LCD (liquid crystal display)
televisions. Prices for platinum, which is used as
a catalyst in fuel cells and catalytic converters
for automobiles, also increased 2.4-fold during
the same five-year period. Prices for tungsten,
which is used to make light-bulb filaments and
increase the hardness and strength of steel, rose
4.7-fold during the same period. Among other rare
metals, prices for nickel, cobalt, vanadium,
molybdenum and manganese also surged 7.1-fold,
4.4-fold, 6.2-fold, 6.0-fold and 2.1-fold,
respectively.
Changes in supply-demand
structure Lying behind the sharp surge in
prices for non-ferrous metals, including rare
metals, are changes in the supply-demand structure
for them. New major consuming nations have
emerged, most notably China and India, the world's
two most populous countries, whose economies are
growing at a breakneck pace.
On the supply
side, meanwhile, a small number of powerful
resource majors, such as Anglo American, Rio Tinto
and BHP Billiton, now dominate the global markets
for non-ferrous metals, wielding great influence
over supplies and prices. In the 1990s, for
example, seven resource majors accounted for only
about 30% of global copper-ore production. But the
percentage has increased to 50%.
The world
has also seen a rising tide of "resource
nationalism" in many producing countries recently
amid steep rises in prices for various resources,
from oil, natural gas and uranium to non-ferrous
metals.
Despite being a major producer of
non-ferrous metals, China has become a net
importer of some metals, such as lead, zinc and
nickel, as the country gobbles them up to feed its
runaway economy. To meet sharply growing demand at
home, China has taken export-restraint measures,
such as lowered tax rebates, increased export
taxes and stricter export quotas, for some rare
metals, including tungsten and rare earth, since
last year.
China has also made aggressive
forays into various parts of the world in pursuit
of resource interests. China's particular focus on
Africa has drawn global attention recently. China
is increasingly reliant on the continent for raw
materials. Africa supplies one-third of China's
oil, with Angola, Sudan and Nigeria being major
suppliers. China also gets bauxite from Guinea,
copper from Zambia, uranium from Namibia and rare
metals from Congo.
Japan's heavy
dependence on imports
The output
of rare metals is small and production areas are disproportionately located.
China produces about 90% of tungsten and rare earth.
China is also the world’s largest producer of indium,
accounting for more than 30% of global total. South Africa
produces about 80% of platinum.
Japan is a major consumer of rare metals.
The world's second-biggest economy accounts for
about 60% of global indium consumption. Japan's
share of global consumption is high for other rare
metals as well, at 20% for platinum, 14% for
nickel and tungsten, 25% for cobalt, 17% for
molybdenum, 11% for vanadium and 24% for rare
earth. Japan imports almost all of the rare
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