"The stakes of the recent dispute between China and Japan over the Japanese detention of a Chinese fishing trawler has reached a head with China blocking the export of precious rare earth metals to Japan. No official announcement has, however, been released and the Chinese Commerce Ministry has strongly denied the imposition of such an embargo. Any official ban on exports would allow Japan to complain to the World Trade Organization (WTO) but with no official Chinese statement and only the reported prevention of ships being loaded, there’s little room for Japan to react. Japan has not received any official communication about a ban either.
Japan and the US are heavily dependent on China for rare earth metals and are China’s primary customers. Japan has been trying to secure its supplies to some extent by setting up rare earth processing units in northern Vietnam, which has small reserves of the metals. Rare earths smuggled from southern China are also processed here but China has been implementing strong measures to limit smuggling.
As reported last month, China, which owns 97% of the global supplies, produced 120,000 tonnes of rare earth metals in 2008 followed distantly by India with 2,700 tonnes. Further, China’s low prices have pushed most other companies out of the rather costly rare earths production market. To top it all, China has been limiting its export quotas and increasing the fear of a global deficit. Prices of rare earth metals have skyrocketed ever since July when China announced a 72% cut in its export quota for the rest of the year..."
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