By Adam Currie — Exclusive to Rare Earth Investing News
Not quite a done dealWhile China dominated headlines, a Japanese news source was left red faced when it released a report stating that the Japan-China friendship association Okinawa Prefecture had signed an agreement with its Chinese counterpart at Hohhot in Inner Mongolia under which both parties agreed to cooperate in businesses involving rare earth. An unnamed official in charge of the Chinese People's Association for Friendship with Foreign Countries has since declared that these reports were false and that no agreement was ever signed.
He went on to add that there was no mention of rare earth during the visit. The news agency has since issued an apology for the reports.Despite this incident, the Japanese government has announced plans to spend $65 million in subsidies over the next few years to assist Japanese companies in reducing their dependence on dysprosium and neodymium, while encouraging recycling and development of alternate materials.
Commenting on the move, Kenichi Hasehira, an official at the Japanese ministry's nonferrous metals division said: "After two years, we expect demand for dysprosium to be cut by about 200 metric tons and demand for neodymium by about 1,000 tons a year from this program.”
Analysts suggested that moves such as this are occurring in response to China's tight grip on the global rare earth market.
Legislation under criticismChina's rare earth export quotas have come under increased criticism from the international community. The European Union (EU), Mexico, and the US have filed complaints with the World Trade Organization (WTO) stating that its pricing policies on raw materials, including magnesium and bauxite, violate international trade agreements.
In 2011, Beijing imposed an export quota of 30,184 metric tonnes, marginally reduced from 30,258 metric tonnes in 2010. For 2012, based on analyst calculations, the country's full-year quota may hit approximately 31,130 metric tonnes.The country underlined that it feels that export restrictions are necessary in order to maintain domestic demand and protect the environment. The WTO responded by stating that it considers the argument illegitimate and that China has been “unable to demonstrate” the benefits of its policies on the environment. At present the ruling does not include rare earth metals, however analysts are hoping to see China alter some of its rare earth policies as a result of the ruling moving forward.