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Japan goes prospecting for rare metals By Hisane Masaki
metals it consumes. China supplies 90% of Japan's rare-earth imports, 79% of
tungsten imports and 70% of indium imports. South Africa supplies 81% of
Japan's platinum imports and 49% of vanadium imports. Japan purchases 44% of
its nickel imports from Indonesia, 30% of cobalt imports from Finland and 45%
of molybdenum imports from Chile.
Raising state reserves of rare metals
Increasingly concerned about global supply shortages, METI
compiled a comprehensive strategy this month for ensuring stable supplies of
rare metals in the medium and long terms. It was the result of the first review
of a government policy on rare metals in more than 20 years.
The new strategy calls for, among other things, increased state reserves of
some rare metals. There has been increasing pressure on the government from
domestic industries to boost such stockpiles.
In fiscal 1983, Japan began stockpiling seven types of rare metals - nickel,
tungsten, cobalt, molybdenum, manganese, vanadium and chromium. As of the end
of March this year, Japan had reserves of these rare metals equivalent to 34.8
days of domestic demand - 24.4-day stocks controlled by the state and 10.4-day
reserves kept by the private sector - compared with the target of 60 days. The
government-affiliated Japan Oil, Gas and Metals National Corp (JOGMEC) manages
the state-controlled reserves at a warehouse in Takahagi, Ibaraki prefecture.
Under the new strategy, the government will increase the state reserves of
vanadium, tungsten, cobalt and molybdenum and will also consider expanding the
scope of state stockpiles to include indium, platinum and rare earth.
The strategy also calls for promoting the recycling of scraps and developing
alternative materials. METI specifically plans to commission domestic
non-ferrous-metal makers and universities this summer to develop alternative
materials in hopes of putting them into practical use in five years' time.
Resource diplomacy and public funds
The new strategy urges the government to step up its diplomacy aimed at
securing new supply sources and also dissuading producing nations from taking
export-restrictive measures. Tokyo believes that export restrictions should be
introduced only as an exception under the international trade rules set by the
World Trade Organization.
The strategy calls for increased Japanese support for mining development in
foreign countries through the extension of ODA money. It also includes pumping
public funds into efforts to help domestic private firms acquire mining
interests abroad. The envisaged public funds will come from such
government-affiliated organizations as JOGMEC, Japan Bank for International
Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXI).
Even before the strategy was adopted, Japan had already begun to place a
greater emphasis on securing non-ferrous metals, including rare metals, as well
as crude oil, natural gas and uranium.
In February, for example, Mongolian President Nambaryn Enkhbayar visited Tokyo
and agreed with Japanese Prime Minister Shinzo Abe to promote cooperation
between the two countries on the development of mineral resources, including
rare metals. To implement the agreement, the two countries are expected soon to
launch a joint committee of government officials and private-sector people.
Mongolia is rich in a variety of minerals, especially coal and copper, although
these remain largely unexploited.
During a tour of resource-rich Central Asia by the METI chief, Akira Amari, at
the end of April, JOGMEC signed cooperation agreements with Kazakhstan and
Uzbekistan for the development of mineral resources, including rare metals.
FTA as a foreign policy tool
Japan has already placed priority on concluding FTAs with resource-rich
countries, as well as neighboring Asian countries, as a way of beefing up
relations with them and thereby ensuring stable supplies of oil, natural gas
and other resources.
On Monday, Japan signed an FTA with Brunei, an oil-and-gas-rich member of the
Association of Southeast Asian Nations (ASEAN). The signing was made during a
meeting in Tokyo between Abe and Sultan of Brunei Hassanal Bolkiah.
Brunei is the seventh country with which Japan has signed an FTA, after
Singapore, Mexico, Malaysia, the Philippines, Chile and Thailand. The FTAs with
Singapore, Mexico and Malaysia have already taken effect. Japan is also
expected to ink an FTA with Indonesia in August. Japan is also negotiating FTAs
with the 10-member ASEAN as a whole, the oil-rich Gulf Cooperation Council,
Vietnam, South Korea, India, Australia and Switzerland. Japan is also eyeing
South Africa as a potential FTA partner.
The Japan-Brunei FTA, which is expected to take effect this year, will
eliminate import tariffs on 99.9% of bilateral trade within 10 years. In
addition to eliminating tariffs, the FTA is aimed at ensuring stable supplies
of oil and natural gas to Japan from the Southeast Asian country. Japan imports
almost all of its oil and gas.
Japan exported 11.5 billion yen's worth of products to Brunei in 2005, with
automobiles and auto parts accounting for 71% of the total. Meanwhile, Japan
imported 252.5 billion yen's worth from Brunei, more than 99% of which were
liquefied natural gas and crude oil.
The Japan-Brunei FTA incorporates an energy clause, under which Brunei will
notify Japan in advance of any emergency measures that would restrict exports
of natural gas and crude oil. Brunei will also hold discussions on any such
measures with Japan and respect existing export contracts. For Japan, getting
such a clause concerning resource supplies included in FTAs is a top-priority
goal in negotiating such trade deals with resource-rich countries.
Hisane Masaki is a Tokyo-based journalist, commentator and scholar on
international politics and economics. Masaki's e-mail address is
yiu45535@nifty.com .
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