The government will boost its stockpile of rare metals in order to secure a stable supply as Japan depends heavily on imports from China and other countries, sources said.
It will also help Japanese companies acquire interests in mine development and smelting. Demand for rare metals is expected to soar in the wake of an expanding market for electric vehicles and the next-generation 5G communications standard, and Japan is trying to be prepared for fiercer competition over natural resources.
There are 34 kinds of rare metals including rare earth elements, cobalt and lithium, and Japan has imported almost all of them. They are essential for manufacturing magnets for electric motors and electronic parts for semiconductors, and any stagnation in imports would inevitably cause damage to the country's industrial sector.
The government places importance on increasing stockpiles as part of its efforts to ensure stable supply. The government-affiliated Japan Oil, Gas and Metals National Corporation (JOGMEC) has been stockpiling each rare metal to meet the threshold of having enough for 60 days of domestic consumption. However, the government plans to extend the period to about 180 days depending on the kind of metal, and included this policy in its New International Resource Strategy compiled in March.
Rare metals are produced in Asian countries including China, as well as in Africa and South America, and the ubiquity of production areas has been a risk factor for resource procurement.
China restricted exports of rare earth elements after a 2010 collision involving a Chinese fishing boat off the Senkaku Islands in Okinawa Prefecture. Even so, Japan still depends on China for 58% of rare earth imports, as of 2018.
In addition to the influence of diplomatic relations, there is also a risk of supply disruption if countries with weak medical systems are affected by infectious diseases such as the novel coronavirus. Japan hopes to respond to unforeseen situations by increasing its stockpile.
Anticipating competition over resource acquisition, the government is also strengthening support for the private sector, including trading companies, to acquire interests in mining and refining.
In the previous Diet session, a revised law concerning JOGMEC was passed, enabling the government to provide debt guarantees through JOGMEC when private companies invest in refineries, on top of existing support for mine development.
It had been common for metal mining sites and smelters to be located close to each other, but in recent years, an increasing number of smelters operate independently. Many of them are run by Chinese companies. In fiscal 2017, for example, about 50% of cobalt ore was produced in the Democratic Republic of the Congo, but about 60% of the ore was smelted in China. The Japanese government hopes to counter China's monopoly by increasing investment in smelters run by Japan's private sector.
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