TOKYO: A consortium of Japanese and South Korean companies plan to take a $1.95billion stake in a Brazilian rare earth mining firm, officials said on Thursday, as both sides look to reduce reliance on China. Japanese companies including Nippon Steel, JFE Steel, and trading house Sojitz as well as state Japan Oil, Gas and Metals National Corp. are negotiating with the Brazilian company, a Tokyo official said. The two South Korean entities are Posco and the National Pension Service (NPS). Companhia Brasileira de Metalurgia e Mineracao (CBMM) produces niobium, a rare metal crucial to the production of high-grade steel for automobiles and other products. The deal comes as Japan looks to diversify rare earth supply for its high-tech industries from computer components to hybrid cars as China, which controls more than 90 percent of global supply, tightens its export quotas. The Japanese companies will take a combined 10 percent stake and the remaining five percent will be taken up by the two Korean companies, NPS spokesman Kim Seok-joo told Dow Jones Newswires.
Japanese public broadcaster NHK separately said Thursday the Japanese team had clinched a basic agreement with CBMM to obtain a 10 percent stake for $1.3billion. The official at Japan's Agency for Natural Resources and Energy noted more than 90 percent of niobium is mined and produced in Brazil.
" Demand for niobium is expected to grow as China, India and other emerging companies become more (technologically) powerful and produce more high-grade steel," said the official who declined to be named.
“Japan imports 90 percent of its niobium needs from Brazil but it is procured through markets, Japan needs to secure stable supply," he said. Japanese industry sources said China temporarily cut off exports last year during a territorial row between Asia's two largest economies. China is building strategic reserves in rare-earth metals, while the Japanese and South Korean governments say they have amassed some reserves and US analysts have called for a similar effort.
In February, Japan said it would cut its reliance on imports of key Chinese rare earth metals by roughly a third.
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