China halts rare earth exports to Japan amid ensions over territorial dispute, traders say

Friday, September 24, 2010

Traders: China halts rare earth exports to Japan

TOKYO — Japanese trading company officials say China’s exports to Japan of rare earth elements — which are crucial for advanced manufacturing — have been halted.

The two officials said Friday the shipments were suspended on Tuesday. They declined to be named as they were not authorized to talk to the media. The move comes amid escalating tensions between China and Japan over a territorial dispute.

Beijing has repeatedly demanded Tokyo release a Chinese fishing boat captain who was arrested after a collision with two Japanese coast guard vessels near disputed islands in the East China Sea. China’s Premier Wen Jiabao on Tuesday threatened action against Japan if it does not immediately release the captain.

Rare earth are metallic elements crucial for superconductors, computers, hybrid electric cars and other high-tech products.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

SHANGHAI (AP) — China’s Trade Ministry denied reports Thursday that Beijing is tightening curbs on exports of crucial rare earth elements to Japan after a territorial dispute further strained often tense relations between the rival Asian powers.

With offices closed in both Japan and China for public holidays, it was difficult to confirm whether the curbs were new or if, as reported by The New York Times, they targeted Japan.

A spokesman for China’s Ministry of Commerce, Chen Rongkai, denied that Beijing had ordered a ban specifically on exports of rare earth elements to Japan.

“I don’t know where The New York Times got that information, but we did not issue any ban of that sort,” Chen said.

Rare earths are a group of metallic elements such as Lanthanum and Gadolinium that are crucial for superconductors, computers, hybrid electric cars and other high-tech products. China, the U.S. and Australia have some of the largest concentrations of mineable rare earths.

The New York Times report cited Dudley Kingsnorth, executive director of the rare earth consulting company Industrial Minerals Company of Australia, as saying he had been getting calls from associates in the rare earth industry who said they had been asked to halt exports to Japan.

Kingsnorth told The Associated Press he spoke to a contact at a Japanese trading house and then contacted another consultant in Japan who confirmed that report.

“I was told it was an ‘unofficial ban,’” Kingsnorth said. “(China) requested major companies to withhold major exports to Japan with a clear indication that if they do export, it might impact on their export quotas.”

Phone calls to Japan’s Foreign and Trade ministries were not answered Thursday, as were calls to major automakers in Japan whose new energy vehicles would be most severely affected by restrictions on supplies of key rare earth elements.

In high-level economic meetings late last month, Japanese officials said they urged China to ease export controls imposed earlier this year on rare earths.

Japanese Foreign Ministry spokesman Satoru Sato told reporters that Chinese Premier Wen Jiabao explained that the limits on exports were intended to counter problems with excess supplies and smuggling.

Relations have sharply deteriorated since then, following Japan’s arrest of the Chinese captain of a fishing boat that collided two weeks ago with Japanese coast guard vessels near islands in the East China Sea claimed by both nations. Japan extended his detention Sunday, and China responded by suspending high-level contacts.

On Tuesday, Premier Wen Jiabao threatened action against Japan if it does not immediately release the captain, saying Tokyo “bears full responsibility for the situation, and it will bear all consequences.”

Wen, whose comments were reported on the Chinese Foreign Ministry’s website, made the remarks while visiting New York for a meeting of the U.N. General Assembly. The report did not elaborate on what actions China might take.

However, the dispute has already resulted in the cancellation of tourist visits and a concert in Shanghai by the Japanese pop group SMAP.

Associated Press writers Kristen Gelineau in Sydney, Shino Yuasa in Tokyo and Chi-Chi Zhang in Beijing contributed to this report.

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