China association denies rare earth deal with Japan

An association in China's major rare earth reserve region on Wednesday denied Japanese media reports claiming that it has agreed to cooperate on mineral business with its Okinawa counterpart.

Reports of a signed agreement of cooperation in the rare earth industry are "seriously fraudulent," said an official in charge of the Chinese People's Association for Friendship with Foreign Countries in Inner Mongolia autonomous region.

There had been no mention of rare earth cooperation in the talks between representatives of the association and the Japan-China Friendship Association of Okinawa Prefecture during their visit to Inner Mongolia from January 18 to 21, the official said.

A Japanese news agency report, datelined Jan 29, quoted sources familiar with the matter as saying that "the two groups signed a mutual exchange agreement ... under which they have confirmed that they will cooperate in businesses using rare earths."

"Expectations that the agreement will lead to the stable supply of the minerals, which are key to high-tech industries, are likely to grow in the Japanese industry," the report said.

The Chinese official said his association has serious concerns about its counterpart in Okinawa, whose head has issued a formal apology for the false reports.

Rare earth metals are vital components for manufacturing an array of sophisticated products, including cell phones, wind turbines, electric car batteries and missiles.

China now produces more than 90 percent of the world's rare earth metals but its rare earth reserves only account for about one-third of the world's total.

Beijing has suspended the issuance of new licenses for rare earth prospecting and mining, imposed production caps and export quotas, and announced tougher environmental standards for rare earth production in order to control environmental damage and protect the resources.