Japanese and Korean firms look to Brazil for rare earth

BBC News, 3 March 2011

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A consortium of Japanese and South Korean firms are to take a share of a Brazilian rare earth mining company.

Last year China started imposing quotas on rare-earth
exports prompting many countries to look elsewhere

The group includes Japan's Nippon Steel and South Korea's Posco and National Pension Service (NPS).

They will pay $1.95bn (£1.19bn) for a 15% stake in Brazil's Companhia Brasileira de Metalurgie e Mineracao (CBMM).

Japan and South Korea are joining up to secure supplies of valuable minerals for the manufacture of hi-tech goods.

China, which currently controls 90% of the world's rare earth supply, has recently reduced exports because of growing domestic demand.

Reducing reliance

Japan and South Korea are both big users of the rare earth minerals that are key in the manufacture of goods such as flat screen televisions and hybrid cars.

A diplomatic row between Japan and China caused a complete halt in rare-earth shipments to Japan from China in September.

The spat started after Japan's navy arrested a Chinese fishing boat captain near disputed East China Sea islands.

China resumed rare-earth shipments two months later when the row had been resolved.

In February, Japan said it would reduce its reliance on imports of rare-earth metals from China by a third.

Deal details

A spokesman for South Korea's National Pension Service said that Japanese investors including Nippon Steel, JFE Holdings and Sojitz Corp will buy a 10% stake in CBMM.

Whilst South Korea's Posco and NPS will jointly buy 5% of the unlisted Brazilian company.

CBMM produces niobium, a rare metal used in the manufacture of high-grade steel for cars and other products.