Japans Thirst for Rare Metals
Japan is feeling the heat over sharply rising prices for non-ferrous metals, especially rare metals, which are used in a wide range of high-technology products.
Global competition is intensifying for non-ferrous metals, including copper and lead, as well as for such energy resources as oil, natural gas and uranium. Prices have risen sharply in recent years on increased global demand, led by red-hot consumption in China. The surge in prices in international markets has been fueled by the inflow of speculative funds.
Japan has even seen a bizarre series of theft cases recently in which copper and electric wires, bronze fire bells, faucets, manhole covers and incense burners have been stolen from streets, rice fields and cemeteries across the country. It is widely suspected that high international metal prices and special procurement demand in China ahead of next year’s Summer Olympic Games in Beijing are behind the thefts.
Spikes in prices for non-ferrous metals are not limited to such base metals as copper, lead and aluminum. Prices for most rare metals, which are widely used as raw materials for high-tech products, have also jumped several-fold in recent years.
Indium, for example, was sold at prices 8.5 times as high this March as in March 2002. Indium is used in such products as LCD (liquid crystal display) televisions. Prices for platinum, which is used as a catalyst in fuel cells and catalytic converters for automobiles, also increased 2.4-fold during the same five-year period. Prices for tungsten, which is used to make light-bulb filaments and increase the hardness and strength of steel, rose 4.7-fold during the same period. Among other rare metals, prices for nickel, cobalt, vanadium, molybdenum and manganese also surged 7.1-fold, 4.4-fold, 6.2-fold, 6.0-fold and 2.1-fold, respectively.
Behind the sharp surge in prices for non-ferrous metals, including rare metals, are changes in the supply-demand structure for them. New major consuming nations have emerged, most notably China and India, the world’s two most populous countries, whose economies are growing at a breakneck pace.
On the supply side, meanwhile, a small number of powerful resource majors, such as Anglo American, Rio Tinto and BHP Billiton, now dominate the global markets for non-ferrous metals, wielding great influence over supplies and prices. In the 1990s, for example, seven resource majors accounted for only about 30 percent of global copper-ore production. But the percentage has increased to 50 percent.
The world has also seen a rising tide of “resource nationalism” in many producing countries recently amid steep rises in prices for various resources, from oil, natural gas and uranium to non-ferrous metals.
Despite being a major producer of non-ferrous metals, China has become a net importer of some metals, such as lead, zinc and nickel, as the country gobbles them up to feed its runaway economy. To meet sharply growing demand at home, China has taken export-restraint measures, such as lowered tax rebates, increased export taxes and stricter export quotas, for some rare metals, including tungsten and rare earth, since last year.
China has also made aggressive forays into various parts of the world in pursuit of resource interests. China’s particular focus on Africa has drawn global attention recently. China is increasingly reliant on the continent for raw materials. Africa supplies one-third of China’s oil, with Angola, Sudan and Nigeria being major suppliers. China also gets bauxite from Guinea, copper from Zambia, uranium from Namibia and rare metals from Congo.
The output of rare metals is small and production areas are disproportionately located. China produces about 90 percent of tungsten and rare earth. China is also the world’s largest producer of indium, accounting for more than 30 percent of global total. South Africa produces about 80 percent of platinum.
Japan is a major consumer of rare metals. The world’s second-biggest economy accounts for about 60 percent of global indium consumption. Japan’s share of global consumption is high for other rare metals as well, at 20 percent for platinum, 14 percent for nickel and tungsten, 25 percent for cobalt, 17 percent for molybdenum, 11 percent for vanadium and 24 percent for rare earth. Japan imports almost all of the rare metals it consumes.
China supplies 90 percent of Japan’s rare-earth imports, 79 percent of tungsten imports and 70 percent of indium imports. South Africa supplies 81 percent of Japan’s platinum imports and 49 percent of vanadium imports. Japan purchases 44 percent of its nickel imports from Indonesia, 30 percent of cobalt imports from Finland and 45 percent of molybdenum imports from Chile.
Information from: english.ohmynews.com
