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Japan Says Chinese Rare Earth Exports Still Halted

Japanese companies say Beijing has blocked rare earths shipments since Sept. 21 in possible retaliation for Tokyo's arrest of a Chinese fishing boat captain.

TOKYO (AP) -- Japanese importers said Thursday that Chinese exports of rare earth metals crucial in high-tech products are still halted after a month, and the government is investigating reports that some Chinese exporters have unilaterally scrapped contracts with Japanese customers.

Japanese companies say Beijing has blocked rare earths shipments to Japan since Sept. 21 in possible retaliation for Tokyo's arrest of a Chinese fishing boat captain near disputed islands.

The captain was released -- and Beijing denies any official ban on shipments to Japan -- but Japanese authorities say supplies have yet to resume.

Without signs of improvement, Japanese companies say they worry that Chinese exporters may cancel contracts for Japan-bound shipments held up by China's customs service and shift them to clients in other countries so they can bring in profits before their export quotas expire in December.

China has about 30 percent of global rare earth deposits but accounts for about 97 percent of production.

An official at a top Japanese importer of rare earths said he was aware of several cases in which companies have had their rare earths shipment contracts unilaterally scrapped by Chinese exporters.

His company's shipment is still stuck at customs but he believes the contract has not been canceled, the official said on condition of anonymity, citing the sensitivity of the issue.

The Asahi newspaper reported Thursday that several Japanese companies have been notified by Chinese rare earths suppliers that they were canceling their contracts to ship them to non-Japanese destinations. One trading company asked for a shipment via South Korea but a Chinese shipper refused because of fear of punishment, the Asahi said.

Tsutomu Murasaki, director of the nonferrous metals division at the trade ministry, said the government is investigating the Chinese rare earths shipment situation. He said many importers are increasingly worried about losing their contracts but he was not aware of an actual cancellation.

"The situation is not at all back to normal," he said. "Shipments are still piling up at customs, though we heard issuance of export permits has become somewhat smoother."

The recent disruption of Chinese supplies has shaken Japanese industry, which is now looking for new suppliers of the exotic metals other than China, while considering becoming a rare earth recycling center.

In Beijing, the English-language Global Times, published by the People's Daily, said Thursday that China is "merely seeking to strengthen the regulations surrounding the rare-earth industry, rather than imposing an injunction on rare-earth exports."

Yoshihide Toh, spokesman for Sojitz Corp., a major Japanese conglomerate whose businesses include rare earths imports, said Japan's import quota of Chinese rare earths is 15,000 tons this year.

Japan, whose demand for the minerals next year is estimated at 32,000 tons, could face a shortage of about 10,000 tons of rare earths, assuming the same quota is allowed by China and additional shipments come from outside China, he said.

China's rare earths export quota this year is 24,280 tons, down from 31,310 tons in 2009, according to the Chinese Commerce Ministry. The ministry said Wednesday it will limit exports of rare earths to protect its environment but denied a report that shipments will be cut by up to 30 percent next year.

China's plan to cut exports has prompted mining companies in the United States and Canada to launch efforts to resume production.

The shipment problem has already affected some Japanese manufacturers.

Onizuka Glass Co. said it was down to its last bag of Chinese cerium, a type of rare earth metal used as a glass abrasive, when it managed to buy a substitute from Estonia.

"For us it's a matter of life and death," company President Yoshihiro Onizuka said in an interview with public broadcaster NHK. "Japan is resource poor and we should be alarmed," he said. "We must end our exclusive reliance on China."