Archive for June 18th, 2012

Monday, June 18, 2012

Japan and Vietnam announce Rare-Earths Research Center

Japan and Vietnam have announced the establishment of a rare-earths research and technology transfer center in Hanoi’s Danfeng County, aimed at reducing dependence on Chinese rare earths, reports the BBC‘s Chinese website. The center will train Vietnamese workers on how to extract rare earths. An agreement to this end had been signed in October last year, between Vietnam’s head of government Nguyen Tan Dung and Japanese prime minister Yoshihiko Noda. Vietnam’s Geology and Minerals Department (ministry) statistics are quoted as saying that Vietnam is one of the countries with the biggest (potential) rare earth resources worldwide.

Chinese Foreign Minister Yang Jiechi gave assurances in October last year that Beijing would remain a “reliable supplier” of the high-tech ores, according to a BBC report back then, possibly under the impression of a WTO ruling of July that year which didn’t apply to the earths in question, but to a similar dispute about other categories of minerals exported (or not exported) by China. But by then, Japanese companies dependent on what seems to constitute a virtual current Chinese monopoly on rare earths had begun to look for suppliers outside China, including Indian suppliers.

Under the (probably correct) impression that China had begun to link bilateral disputes with Japan, and Japan’s dependence on mineral imports from China, the Economist, usually a more mild critic of Beijing, railed against an especially nefarious turn in the Chinese government’s response to Tokyo, as China

apparently suspended its export of rare-earth minerals, which are vital to making electronics components used in everything from handheld gadgets to cars. On September 23rd China emphatically denied that it is blocking exports. And this may be true: there probably isn’t a formal directive. But in a country where informal rules abound, exporters know that it can pay to withhold shipments—in solidarity with a government that is angry at its neighbour.

That was in summer 2010, and Japan had apparently succumbed to Chinese pressure – no charges were brought against a Chinese skipper, Zhan Qixiong, who had originally been accused of  deliberately bashing into two Japanese patrol boats. Apparent Japanese weakness vis-a-vis China was bad, the Economist mused.

China’s worst offense, from the perspective of those who advocate global trust – warranted or unwarrented – in the interest of unlimited international division of labor, had been that it politicized supplier-customer relations in a very sensitive field, i. e. the minerals Japan’s high-tech industries depend on heavily. No wonder that the Economist was angry.

As more ventures like [the Vietnamese-Japanese center] get off the ground, it will be interesting to see if China decides to lower its prices and change its rhetoric, writes The Register. But no such change should keep Japan and other high-tech producing countries from diversifying their supplies further.

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