Australia is re-emerging as a key supplier of rare earths, sealing a ten-year supply deal with Japan after a pact between the two governments.
Foreign minister Kevin Rudd announced an agreement with his Japanese counterpart Seiji Maehara in Canberra Tuesday that will reduce Japan’s reliance on Chinese-sourced elements, WSJ.com reported.
Japanese trading house Sojitz Corp said it would pay around $300 million for the rights to 8,500 tonnes of rare earth metals annually from Australian mining firm Lynas for the next ten years, Reuters reported.
The total is equivalent to nearly 30% of annual demand in Japan.
China is the world’s largest supplier of rare earths – elements used in mobile phones and other electronic equipment - but has sparked fears of a supply crisis in recent months after freezing supplies to Japan following a clash over disputed islands in the Sea of Japan.
Rudd took the chance to talk up Australia’s position as a stable supplier of the elements, the Journal said, as he seeks to establish Australia as an alternative source.
Rare element prices soared yesterday after figures revealed China’s exports dropped 77% month-on-month in October after the government cut the quota, Bloomberg reported.
Japan reached a similar supply deal with Vietnam in October, the news site said, as it looks to lessen its reliance on China.
Earlier this month Chen Jian, vice minister at China’s ministry of commerce, said quotas will be cut further in 2011, but promised no significant drops.