Mongolia has emerged as a new contender in the race for world domination in rare earths.
Bloomberg Businessweek has reported that Japan plans to send a study group to Mongolia this month to look at rare-earth deposits with the Mongolian government. The two countries have also agreed to expedite talks for an Economic Partnership Agreement and to develop coal and uranium projects.
According to another report on The Japan Times, Japan has agreed to help Mongolia develop mines to exploit the valuable metals. Japanese Prime Minister Naoto Kan and his visiting counterpart, Sukhbaatar Batbold, struck the deal on Saturday.
Kan was reported as saying: "Mongolia has high potential in mineral material development and this will serve the two countries' national interests.”
Batbold added that Mongolia would be able to produce value-added products by using advanced Japanese technology.
Interestingly, Batbold was reported to actually be visiting Tokyo for another reason - to attend a retirement ceremony being held yesterday for his country’s sumo wrestler grand champion Asashoryu, a yokozuna *, who left the sport in February.
But regardless of sumo wrestler retirement parties, the two leaders met and the agreement was struck. And the timing couldn't have been better as the announcement came one day after Japan revealed a whole raft of plans aimed at reducing its dependency on China for its valuable rare earths supply.
Rare earths are essential components for all kinds of technology, from iPods to computer memory, as well as other essential everyday items such as cars and wind turbines.
And Japan, along with many other countries, has been getting increasingly worried about China’s monopoly in this area - China controls more than 95 percent of the global supply of the minerals but has been tightening up its export quota.
Meanwhile, experts have forecast that Australia could benefit from this situation and go on to become one of the world’s leading producers of the vital minerals in a few years’ time.
According to AFP, industry sources and analysts said Australia has vast reserves of the obscure metals - maybe even up to 46 percent of the world’s rare earth deposits.
"By about 2014 we should be one of the dominant suppliers of rare earths to the world. And we will compete with China for that," AFP said it was told by a long-term investor. "We're a small country but we're going to be the Saudi Arabia of rare earths."
Meanwhile, Matthew James, vice president of corporate and business development at Australia's Lynas Corporation, said people touched rare earths every day of their lives but they were not aware of the applications they were in.
He added: "They are underpinning societal trends which are not going to reverse. We have to become more energy efficient, we have to become better in managing our environmental footprint.
"People are not going to accept larger, clunkier devices, they want smaller, faster, lighter. These are trends which are driving growth in the rare earth market."
Mr James told AFP he predicted an even bigger change may be on the cards - and that Lynas could be selling rare earths to China within a decade as the country's supplies dwindled in the face of soaring consumer demand.
*EyeSee Yokozuna is the highest rank in sumo. The name literally means "horizontal rope".