Japan business: No rare earths coming from China

(CNN) – China can publicly deny that it has halted exports of rare earth. But Shigeo Nakamura knows what he is seeing: no rare earth has come into his company from his Chinese suppliers.

“Nothing, nothing at this moment. Nothing,” said Nakamura, president of Advanced Material Japan Corporation, a Tokyo-based rare earth and metal trading house.

Nakamura said his company has a year’s supply stockpiled, but he is worried.

“This,” he said, pointing to a tiny, two millimeter cylinder, “is a micro-motor from a mobile phone. If China stops supply of the raw material, you will not use the mobile phone. You will not see the TV. And you will not see any refrigerator.”

Rare earths are minerals used in small amounts on virtually every electronic item for sale around the world.

China has 30 percent of the world’s reserve of rare earths, but mines it cheaply and effectively. More than 90 percent of the world’s available supply is currently mined in China.

That control became clear last month to Japanese rare earth importers, exporters and the government.

In the wake of a collision at sea between a Chinese fishing vessel and the Japan coast guard in September, multiple Japanese rare earth importers tell CNN that China dramatically slowed exports of rare earth.

China denies it stopped exports in retaliation.

But Beijing has been curbing international exports for the last few years amid concerns about supply and growing demand.

Whatever the reason behind the slowdown in rare earth exports, Mizuho Research Institute senior economist Jun Inoue says it highlights what Japanese economists call “China risk.”

That risk involves the world relying too heavily on China, a country whose communist government can rapidly affect the global economy.

“The world is heavily relying on China not only in finance and trade, but also natural resources,” said Inoue. “In the market economy, each economic entity makes decisions by individual will. But under the controlled market economy (like China), the government has plans and targets. There is a risk that such national plans and targets influence the world economy.”

China on Wednesday denied that it has halted export of rare earth materials amid news reports that Beijing started blocking shipments of the crucial minerals to the United States and Europe following similar measures against Japan.

"China will continue to provide rare earth to the rest of the world," the ministry of commerce said in a statement faxed to CNN. "At the same time, to protect exhaustible resources and achieve sustainable development, China will also continue to implement restrictive measures on the mining, production and export of rare earth."

Nakamura said his company has a year of rare earth stockpile. He remains optimistic that Beijing will loosen exports, saying China stands to lose too much money if developed economies like Japan and the U.S. mine for rare earth elsewhere.

“Maybe two weeks” before Chinese exports resume, said Nakamura. “Two weeks, I hope.”

Posted by: CNN Correspondent, Kyung Lah

Source: cnn.com