By Yuko Inoue and James Regan
TOKYO/SYDNEY, Nov 24 (Reuters) - Japanese trading house Sojitz Corp reached a procurement deal for rare earths with Australian miner Lynas Corp on Wednesday in the latest move by Japan to reduce its reliance on China for the crucial minerals.
The deal reflects the Japanese government's policy initiative to diversify sourcing away from China and comes a day after Australia promised to be a future long-term supplier of rare earths to Japan.
Shipments from China to Japan stalled following a spat over disputed islands in the East China Sea.
Shares of Sojitz surged 9 percent on the news, with volume spiking to more than 8 times the daily average of the past 3 months.
Under the deal, Japan will secure more than 9,000 tonnes of rare earths per year -- nearly a third of its current needs -- from early 2013, Sojitz senior vice president Satoshi Mizui told a news conference.
Initial shipments of 1,000 to 3,000 tonnes are expected to start in the final quarter of 2011.
Sojitz, which is Japan's the sixth-biggest trading house, and state-run Japan Oil, Gas and Metals National Corp will invest up to $250 million in a Lynas expansion project.
'The Japanese government's assistance was a strong tail wind for us, particularly after the rare early supply from China stalled in the summer,' Mizui said.
Details of the financial agreement are yet to be set, but buying a stake in Lynas is an option, Mizui said.
The supply will centre on four light rare earths: neodymium, cerium, praseodymium and lanthanum.
For a factbox on rare earths click on.
China has a virtual monopoly on world supplies of rare earths, vital for the manufacture of many high-tech electronics goods, and its moves to curb exports have prompted consumer nations to look for alternative supply sources.
'It is more a psychological boost than helping sort out the current problem of shortages,' said Shuji Sugata, a manager at Mitsubishi Corp Futures. 'It is dangerous to depend on one country for the supply of one specific material.'
Lynas, which aims to raise annual output to 22,000 tonnes in 2013, has already signed about half a dozen supply contracts with users.
'There is an absolute seriousness (in Japan) to finding supply. There is a good recognition that Lynas is the first new producer to come onstream outside of China,' Lynas Executive Chairman Nick Curtis told reporters in Australia.
Japan's trade minister Akihiro Ohata said on Wednesday that Japan-bound rare earth shipments had left China, confirming the end of a de-facto suspension by Beijing on exports of the minerals since late September.
Japan has been stepping up efforts to diversify its sources of supplies of the strategic minerals, agreeing with Mongolia last week to cooperate on developing mineral resources including rare earths.
Last month, Tokyo agreed with India to cooperate in developing and recycling rare earths and rare metals, and reached an agreement with Vietnam on mining rare earths there.
Demand for rare earths is set to grow by 7 to 9 percent a year over the next five years against a 5 percent rise in supply, according to Resource Capital Research analyst Trent Allen.
'This could create severe undersupply of some elements, especially the scarce middle and heavy rare earths,' Allen said.
(Additional reporting by Chikako Mogi)
(yuko.inoue@thomsonreuters.com; +81-3-6441-1855; Reuters Messaging: yuko.inoue.reuters.com@reuters.net)) Keywords: SOJITZ LYNAS/ (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
TOKYO/SYDNEY, Nov 24 (Reuters) - Japanese trading house Sojitz Corp reached a procurement deal for rare earths with Australian miner Lynas Corp on Wednesday in the latest move by Japan to reduce its reliance on China for the crucial minerals.
The deal reflects the Japanese government's policy initiative to diversify sourcing away from China and comes a day after Australia promised to be a future long-term supplier of rare earths to Japan.
Shipments from China to Japan stalled following a spat over disputed islands in the East China Sea.
Shares of Sojitz surged 9 percent on the news, with volume spiking to more than 8 times the daily average of the past 3 months.
Under the deal, Japan will secure more than 9,000 tonnes of rare earths per year -- nearly a third of its current needs -- from early 2013, Sojitz senior vice president Satoshi Mizui told a news conference.
Initial shipments of 1,000 to 3,000 tonnes are expected to start in the final quarter of 2011.
Sojitz, which is Japan's the sixth-biggest trading house, and state-run Japan Oil, Gas and Metals National Corp will invest up to $250 million in a Lynas expansion project.
'The Japanese government's assistance was a strong tail wind for us, particularly after the rare early supply from China stalled in the summer,' Mizui said.
Details of the financial agreement are yet to be set, but buying a stake in Lynas is an option, Mizui said.
The supply will centre on four light rare earths: neodymium, cerium, praseodymium and lanthanum.
For a factbox on rare earths click on.
China has a virtual monopoly on world supplies of rare earths, vital for the manufacture of many high-tech electronics goods, and its moves to curb exports have prompted consumer nations to look for alternative supply sources.
'It is more a psychological boost than helping sort out the current problem of shortages,' said Shuji Sugata, a manager at Mitsubishi Corp Futures. 'It is dangerous to depend on one country for the supply of one specific material.'
Lynas, which aims to raise annual output to 22,000 tonnes in 2013, has already signed about half a dozen supply contracts with users.
'There is an absolute seriousness (in Japan) to finding supply. There is a good recognition that Lynas is the first new producer to come onstream outside of China,' Lynas Executive Chairman Nick Curtis told reporters in Australia.
Japan's trade minister Akihiro Ohata said on Wednesday that Japan-bound rare earth shipments had left China, confirming the end of a de-facto suspension by Beijing on exports of the minerals since late September.
Japan has been stepping up efforts to diversify its sources of supplies of the strategic minerals, agreeing with Mongolia last week to cooperate on developing mineral resources including rare earths.
Last month, Tokyo agreed with India to cooperate in developing and recycling rare earths and rare metals, and reached an agreement with Vietnam on mining rare earths there.
Demand for rare earths is set to grow by 7 to 9 percent a year over the next five years against a 5 percent rise in supply, according to Resource Capital Research analyst Trent Allen.
'This could create severe undersupply of some elements, especially the scarce middle and heavy rare earths,' Allen said.
(Additional reporting by Chikako Mogi)
(yuko.inoue@thomsonreuters.com; +81-3-6441-1855; Reuters Messaging: yuko.inoue.reuters.com@reuters.net)) Keywords: SOJITZ LYNAS/ (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.