Action is heating up in the world of rare earth minerals. China has blocked exports of rare earths to Japan over a fishing dispute between the two countries. Earlier this month, Japan arrested the captain of a Chinese fishing trawler for fishing in waters near uninhabited islands claimed by both countries. China demanded the captain's return to little effect. Now it appears to be turning up the pressure. Japan, like the United States, is heavily dependent on imports of rare earths from China for their widespread use in manufacturing of hybrid cars, electronics, and wind turbines. But China currently dominates the market for producing rare earths, accounting for approximately 95% of the worldwide supply. (A spokesperson with China's Ministry of Trade and Economics Co-operation yesterday denied that the country put in place an official trade embargo.)
The shutoff of rare earth exports to Japan isn't expected to have a significant short-term effect, because Japanese companies have been stockpiling rare earths for years to reduce their vulnerability to possible supply shortages, says Gareth Hatch, co-founder of Technology Metals Research, a rare earths market-analysis company in Carpentersville, Illinois. In that sense, China's move may be not be felt as anything more than a shot across the bow, Hatch says. "But the symbolism goes way beyond the actual impact," he says.
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