Cablegate: Daily Summary of Japanese Press 12/07/09

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DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA;
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION;
TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE;
SECDEF FOR JCS-J-5/JAPAN,
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR;
CINCPAC FLT/PA/ COMNAVFORJAPAN/PA.

E.O. 12958: N/A
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 12/07/09

INDEX:
AMERICAN EMBASSY, TOKYO
PUBLIC AFFAIRS SECTION
OFFICE OF TRANSLATION AND MEDIA ANALYSIS
INTERNET E-MAIL ADDRESS: otmatokyo@state.gov
DAILY SUMMARY OF JAPANESE PRESS
December 7, 2009

INDEX:

(1) PM Hatoyama to tell U.S. his final decision on Futenma
relocation "shortly" (Mainichi)

(2) Parliamentary Secretary of Defense Nagashima suggests need to
send PM's special envoy to U.S. on Futenma issue (Sankei)

(3) Ambassador Roos tells Japan "Washington is furious" with
decision to delay Futenma relocation solution to next year
(Mainichi)

(4) Ambassador Roos points out closeness of Japanese, U.S. corporate
culture (Nikkei)

(5) MOFA begins seriously examining secret nuclear accord;
Encounters difficulty in handling security policy; Three nonnuclear
principles' conformity with nuclear umbrella to become issue
(Nikkei)

(6) Japanese-flag oil suppliers set to fight all-out battle in
Iraq's 2nd round of oil deals on Dec 11-12 (Sankei)

(7) Rare metal: Public and private sectors frantic about securing
stable supply (Tokyo Shimbun)

ARTICLES:

(1) PM Hatoyama to tell U.S. his final decision on Futenma
relocation "shortly"

MAINICHI (Page 1) (Full)
Evening, December 7, 2009

Rumu Yamada, Daisuke Kondo

In connection with the issue of the relocation o the U.S. forces'
Futenma Air Station (in Ginowan City, Okinawa), Prime Minister Yukio
Hatoyama stated on the morning of Dec. 7: "I think it is time to
finalize how we should tell the U.S. about the government's
thinking," indicating his intention to convey to the U.S. the
government's decision at an early date. He made this statement to
reporters in front of his official residential quarters.

When reporters asked him if the above statement is premised on a
solution before the end of the year, he refrained from giving an
explicit answer, but said: "I think it is time to decide what to say
right now, taking everything into account."

With regard to the U.S. side's demand regarding the existing plan to
relocate Futenma to the coastal area of Camp Schwab (in Nago City),
Hatoyama said: "We are also a coalition government, and the people
of Okinawa have different expectations. It will not be so easy."

TOKYO 00002788 002 OF 010

Commenting on the Prime Minister's remarks at his news conference on
the morning of the same day, Chief Cabinet Secretary Hirofumi Hirano
said: "He probably meant that regardless of the substance (of the
conclusion), the government needs to decide on how it intends to
handle the Futenma issue." He added, "This probably meant that it is
time to sort things out squarely and indicate a policy direction,
including whether this will be acceptable to the U.S. and the
Okinawan people."

Meanwhile, at a meeting of the secretaries general and Diet Affairs
Committee chairmen of the Democratic Party of Japan (DPJ), the
Social Democratic Party (SDP), and the People's New Party on the
morning of Dec. 7, SDP Secretary General Yasumasa Shigeno asked that
the ruling parties step up their efforts to appeal to the government
from the standpoint of opposing the existing plan for Futenma
relocation. DPJ Secretary General Ichiro Ozawa said he would convey
this to the government.

(2) Parliamentary Secretary of Defense Nagashima suggests need to
send PM's special envoy to U.S. on Futenma issue

SANKEI ONLINE (Full)
12:13, December 7, 2009

The Dec. 7 issue of the South Korean newspaper Chosun Ilbo carried
an interview with Parliamentary Secretary of Defense Akihisa
Nagashima in which Nagashima reportedly said that in light of the
difficulties in reaching a solution on the issue of the relocation
of the U.S. forces Futenma Air Station (in Ginowan City, Okinawa),
there is a need to show consideration by sending a special envoy
carrying a personal letter from Prime Minister Yukio Hatoyama to the
U.S., for instance.

According to Chosun Ilbo, Nagashima pointed out that the Japan-U.S.
relationship "is on the verge of a crisis in the short term." He
said that it is necessary to convey Japan's thinking to the White
House at an early date and cited Foreign Minister Katsuya Okada as a
possible special envoy.

Nagashima also explained that since the 50th anniversary of the
revision of the Japan-U.S. security treaty is approaching next year,
President Barack Obama is expected to visit Japan by next November.
He said that the government will make a decision by next fall at the
latest. (Kyodo)

(3) Ambassador Roos tells Japan "Washington is furious" with
decision to delay Futenma relocation solution to next year

MAINICHI (Pages 1, 3) (Full)
December 7, 2009

Japan informed the U.S. side that it intends to defer a decision on
the issue of the relocation of the U.S. forces' Futenma Air Station
(in Ginowan City, Okinawa) to next year at the meeting of the
cabinet-level working group on Dec. 4. U.S. Ambassador to Japan John
Roos asked the other participants in the meeting to leave the room
and drew near to Foreign Minister Katsuya Okada and Defense Minister
Toshimi Kitazawa.

"Washington is furious. Didn't Prime Minister Yukio Hatoyama tell
President Obama 'trust me' at the Japan-U.S. summit in November? Why
have things come to this? If things go on like this (and the current

TOKYO 00002788 003 OF 010

relocation plan does not move forward), Futenma will remain where it
is."

The postponement of the decision came as a total surprise to the
U.S. side. The fact that Okada and Kitazawa had expressed their
intention to find a solution before the end of this year also turned
out to be an act of deceiving the U.S. Hatoyama has also asked for
considering "new relocation sites." Okada stated at his news
conference on Dec. 5 that "the situation is such that it will be
very difficult to hold the working group's meetings," expressing his
concern that the examination process may be stalled.

The Prime Minister's side had envisioned a two-stage scenario:
making a decision based on the existing plan with minor
modifications before year end and presenting a blueprint for the
relocation of the Futenma base out of Okinawa in the future. The
U.S. side had also been sounded out on this. Kiyoshi Sugawa, special
researcher of the Cabinet Secretariat who is close to Hatoyama, was
dispatched to the bureau chief level talks on the Futenma relocation
issue in Washington on Nov. 24. He held meetings with senior U.S.
government officials separate from the bureau chiefs.

Japan Research Institute Honorary Chairman Jitsuro Terashima, who is
known to be Hatoyama's foreign policy adviser, engaged in prior
consultations with the Prime Minister and visited the U.S. from Nov.
28 through the intercession of the U.S. Embassy in Tokyo. However,
the U.S. side repeated its position that "anything other than the
current plan is unacceptable." There was no room for compromise.

The Prime Minister realized the severe attitude on the U.S. side,
but he made use of (the opposition of the) Social Democratic Party
(SDP) instead to revese the trend toward settling the issue before
year end. On Dec. 4, he emphasized to reporters that "I have never
said when (a decision will be made)," laying the groundwork for
postponing the decision to next year.

According to a senior government official, the U.S. side has
conveyed to the prime minister's office the message that "the timing
of the conclusion is not the issue," "the conclusion needs to be the
current plan." There is a gap between this and Hatoyama's intention
to consider relocation out of Okinawa or out of Japan. His close
aides reveal that "the SDP is being used as an excuse; what he
really has in mind is to postpone the decision to after the House of
Councillors election, since no potential relocation site can be
found outside of Okinawa."

The reason why Hatoyama is persisting with relocation out of Okinawa
or out of Japan is his desire to review the Japan-U.S. alliance to
coincide with the 50th anniversary of the revision of the Japan-U.S.
security treaty next year. He is keen on making a comprehensive
review of the bilateral alliance, including the major issues of
omoiyari yosan (the so-called "sympathy budget" or host nation
support), the Japan-U.S. Status of Forces Agreement, and the Futenma
issue.

It is said that "security without the permanent stationing of
troops," a proposal included in the basic policies of the old
Democratic Party of Japan (before its merger with Ichiro Ozawa's
Liberal Party) in 1996 was the product of discussions with senior
Okinawa officials who were then lobbying the Tokyo government for
the return of U.S. military bases in the prefecture in stages. This
idea still underlies Hatoyama's thinking today. The above Japanese

TOKYO 00002788 004 OF 010

official laments that "probably, the only option is for the Prime
Minister to visit the U.S. before the end of this year to give an
explanation."

What made Hatoyama decide to defer the solution to the Futenma issue
to next year was the SDP's pressure on him to do so by threatening
to leave the coalition government.

On the afternoon of Dec 1, the SDP's Senior Vice Minister for Land,
Infrastructure, Transport, and Tourism Kiyomi Tsujimoto and policy
chief Tomoko Abe grabbed Chief Cabinet Secretary Hirofumi Hirano and
Okada, respectively, at the House of Representatives plenary hall
and told them: "If you betray the SDP and the Okinawan people and
make a decision based on the existing plan, we will bolt from the
coalition. Then not one bill will pass the House of Councillors from
the regular Diet session." They warned Hirano and Okada that if a
decision is made to relocate the Futenma base under the existing
plan before year end, the Hatoyama administration will be untenable.
Tension rose at the office of the DPJ's Diet Affairs Committee when
they heard about this. Diet Affairs Committee Chairman Kenji Yamaoka
blustered at the top political officials of the Ministry of Defense
(MOD): "A decision before year end is absolutely unacceptable."

Hatoyama had met with Okada, Hirano, and Kitazawa at the prime
minister's office earlier, telling them his intention to "attach
importance to the coalition." Okada and Hirano had no choice but to
accept the SDP's demand.

Tsujimoto and Abe's action was a result of a request from Lower
House member Kantoku Teruya (second district of Okinawa), who got
wind of the top-secret meeting (on Nov. 27) between Hatoyama and
Okinawa Governor Hirokazu Nakaima, who favors a solution based on
the current plan with minor modifications. Teruya had asked them to
put a stop to a seeking a solution before year end.

DPJ Secretary General Ichiro Ozawa, who is said to give priority to
the coalition, sent out a signal on Nov. 25. Some time past 4:00
p.m., Okada, who had a one-on-one meeting with Ozawa at the
secretary general's office in the Diet for about 20 minutes, emerged
with a sullen expression.

Okada had been working for a solution based on the current plan
before the end of 2009. Realizing that this would affect the ruling
coalition, he wanted to give an explanation to Ozawa in advance.
According to his aides, Ozawa told him in no uncertain terms that
"the coalition is important."

Meanwhile, Kitazawa, who had hinted strongly at keeping in step with
Okada to work for a decision before year end, also began to change
his position. Kitazawa had been saying previously: "I have sorted
this out with Ms. Fukushima (SDP leader Mizuho Fukushima). The SDP
will not leave the coalition."

However, his meeting with Azuma Koshiishi, chair of the DPJ caucus
in the Upper House and a close confidant of Ozawa, on Nov. 30 became
the turning point. He began to tell his aides that from the way
Koshiishi was expressing concern about the steering of the Upper
House, "coordination between the cabinet and Mr. Ozawa has not been
carried out."

On Dec. 2, Kitazawa shifted to giving importance to the coalition in
a speech to the National Defense Academy, which trains Self-Defense

TOKYO 00002788 005 OF 010

Forces officers. He said: "Is ruining the coalition and triggering
political confusion in Japan's interest? I don't think the
Japan-U.S. relationship will be excessively strained if a decision
is deferred to next year."

On the same evening, a party to celebrate the appointment of
Kitazawa and State Minister for Financial Affairs and Postal Reform
Shizuka Kamei to the cabinet was held at a condominium in Tokyo.
Kamei, who supports the SDP on the Futenma issue, warned Kitazawa on
this issue: "Do not make a decision before year end."

This began Kitazawa's shift toward deferring the decision. He began
saying: "We will earmark budget allocations related to Futenma in
order to show good faith to the U.S." and "I will visit Guam (the
relocation site of U.S. Marines in Okinawa) to show the SDP that we
are looking for relocations sites out of Okinawa."

With the decision being deferred, Okada is now forced into a corner
since up to the end he had advocated reaching a solution before the
close of 2009. According to a senior MOD official, Okada was the
only one who disagreed with the decision to defer the solution at
the meeting among Hatoyama, Hirano, Okada, and Kitazawa at the prime
minister's office on Dec. 3. Together with Kitazawa, he had led the
push for a solution before year end, and for a while, Hatoyama was
moving toward making a decision in 2009, but they pulled the rug
from under his feet at the last minute.

Relations between Hatoyama and Okada had been strained for a while.
When Okada mentioned in mid-September a solution before year end,
Hatoyama reportedly expressed displeasure: "Why are you saying
something like that?" It seemed to Hatoyama that Okada's policy
would narrow down the options in the negotiations with the U.S.

Meanwhile, Okada referred to media reporting about Hatoyama's order
to look for new relocation sites at an informal cabinet meeting on
Dec. 4 and retorted that "no such instruction was given." For Okada,
who is at the forefront of negotiations with the U.S., such an
"order" will imperil the existing relocation plan and the premise of
the re-examination process itself will become untenable. He had to
explain at the bilateral cabinet-level working group meeting on Dec.
4 that "the Prime Minister issued instructions to engage in serious
debate."

Okada's aides lament that they "have told him many times to discuss
the coalition issue with the Prime Minister thoroughly, but this has
not been done."

Not only is Japan not keeping pace with the U.S. on the Futenma
issue, it is expanding the debate further, thus intensifying a
confrontational policy toward the U.S. The SDP's Tsujimoto and Abe,
who pressed the government to give up on making a decision before
year end, are now saying with great enthusiasm: "We will suggest
relocation to Guam to the Prime Minister" and have indeed conveyed
this message to the Prime Minister's aides. Teruya reckons that "the
Prime Minister is now thinking seriously about relocation to Guam."
Some administration officials are now talking about the Kansai
Airport as a possible relocation site. The Ministry of Foreign
Affairs says: "We wish the SDP would take care of the negotiations
with the U.S."

When Okada visited Okinawa on Dec. 5, he explained that the U.S.
position is that "Futenma relocation cannot be realized unless the

TOKYO 00002788 006 OF 010

current plan is implemented." He told the audience about his
difficult position of "being forced to make a decision under this
dilemma in the Japan-U.S. relationship," but he was jeered by the
crowd at the meeting in Nago City, which has been identified as the
relocation site. He was told to find a relocation site outside of
Okinawa even if this will take time.

(4) Ambassador Roos points out closeness of Japanese, U.S. corporate
culture

NIKKEI (Page 6) (Full)
December 5, 2009

U.S. Ambassador to Japan John Roos delivered a speech at a meeting
of the Japan Institute of International Affairs in Tokyo on Dec. 4.
Discussing Japan-U.S. economic relations, Roos pointed out that
"Americans think of Honda, Toyota, and Sony almost as American
companies, while, on the other hand, McDonald's and Starbucks in
Japan are very Japanese." He emphasized that the corporate cultures
in the two countries are closely linked.

Looking back on the 100 days since he took up his post in August,
the Ambassador also said: "I am fascinated by Japanese culture. I'm
fascinated by the temples in Kyoto, the tea ceremony in Tokyo, and
the challenging Japanese language lessons."

(5) MOFA begins seriously examining secret nuclear accord;
Encounters difficulty in handling security policy; Three nonnuclear
principles' conformity with nuclear umbrella to become issue

NIKKEI (Page 2) (Full)
December 7, 2009

The expert panel set up by Foreign Minister Katsuya Okada to shed
light on Japan-U.S. secret agreements, including one allowing the
U.S. to bring nuclear arms into Japan, held its second meeting at
the Ministry of Foreign Affairs (MOFA) on Dec. 6. With this, MOFA
has shifted its work of examining the secret accords into full gear.
The advisory panel will postpone a study of measures for security
policy after the disclosure of the secret deals such as how to
ensure the consistency of Japan's three nonnuclear principles' with
the U.S. nuclear umbrella. Some members of the government are
concerned about this examination creating a new source of turmoil in
Japan-U.S. relations.

Since its inauguration on Nov. 27, the committee members have been
individually examining diplomatic documents subject to the
examination at MOFA. In yesterday's meeting, the panel members
apparently reported on the current status of the examination and
confirmed how they plan to proceed with it.

The panel is expected to wrap up its examination at the end of
January next year. "We will have to work quickly or we won't be able
to finish on time," said one panel member. The panel intends to
forge ahead in its examination of documents such as declassified
U.S. documents, the analysis of which has been done by Osaka
University Prof. Kazuya Sakamoto, who is well versed in the revision
of the U.S.-Japan Security Treaty, and Hosei University Prof. Yasuko
Kono, who is well acquainted with the Japan-U.S. negotiations on the
reversion of Okinawa to Japanese administration.

As the examination progresses, MOFA officials have been talking

TOKYO 00002788 007 OF 010

frequently about how to respond to the envisaged security policies
of Japan and the U.S. after the disclosure of the secret accords.

For instance, if it is confirmed that there is a secret agreement
that stipulates that port calls and transit through territorial
waters by U.S. vessels carrying nuclear weapons are not considered
to be the introduction of nuclear weapons into Japan, and that they
are excluded from being subject to Japan-U.S. prior consultations,
the possibility will become stronger that the three nonnuclear
principles - the policy of not possessing, not producing, and not
allowing the transit of nuclear weapons - has been violated,
admitting port calls and passages without prior consultations.

The government will be pressed to make a decision on whether to ease
the nonnuclear principles and exclude port calls and transit from
being subject to consultations, or to uphold them in principle.

If it is true that there is a secret agreement that the U.S.
military can use the U.S. bases in Japan freely without prior
consultations in the event of a contingency involving the Korean
Peninsula, the government will have to decide on whether to ask the
U.S. side for a review.

Many MOFA officials have said that the ministry should discuss the
issue with the U.S. side before disclosing a report on the secret
deals. This is because "there are some documents that cannot be
disclosed based on the Japanese side's decision alone," said a
senior MOFA official.

However, Okada has not made any announcement about the examination
of ex post facto measures up until now. When asked by reporters
about how the government will deal with the fact that former bureau
chief Bunroku Yoshino testified that Tokyo and Washington concluded
a secret accord that Japan would shoulder costs for the reversion of
Okinawa to Japan, the foreign minister reiterated that he would wait
for the conclusion of the expert panel. A senior MOFA official
explained, "The foreign minister's judgment is that if the ministry
starts looking into ex post facto measures, the force of shedding
light on the truth will be weakened."

Yet, if the government does not determine its response, it will not
be able to hold talks with the U.S. side. A high-level U.S.
government official said, "It is inevitable that there will be a
negative impact on the Japan-U.S. alliance if the work of resolving
the issue is moved forward alone." Some government officials are
starting to make comments, saying that if Japan deals with the
secret deal issue improperly, the impact will be felt not only on
the Futenma relocation issue but also on other areas of the
Japan-U.S. alliance.

(6) Japanese-flag oil suppliers set to fight all-out battle in
Iraq's 2nd round of oil deals on Dec 11-12

SANKEI (Page 10) (Excerpts)
December 7, 2009

Sumiko Uehara

Iraq will conduct a second round of tenders on Dec. 11-12 to tap its
oilfields. For resource-poor Japan, winning contracts to
independently develop oilfields is a long-cherished desire. But in
the first bidding held in June, contracts were awarded to Chinese

TOKYO 00002788 008 OF 010

corporations and global oil majors in the United States and Europe.
Although Japan has had an eye, from early on, on the second round of
deals, including huge oilfields, Japanese oil suppliers have many
rivals.

Iraq has the world's third largest oil reserves after Saudi Arabia
and Iran. Large quantities of crude oil lie in 10 oilfields in Iraq,
including Majnoon, West Qurna, and East Baghdad, for which the
auction will be held.

A fierce battle is already underway between the alliance composed of
Russia's Lukoil and the U.S.'s ConocoPhillips and the U.S.'s Exxon
Mobile over the Qurna oilfield, which has an estimated 15 billion
barrels of oil reserves.

Six Japanese companies, including INPEX and JAPEX, also have bidding
qualifications. But they are clearly inferior to the
Lukoil-ConocoPhillips alliance and Exxon Mobile.

"Japanese companies have little experience in developing and
managing oilfields, so they will have to tie up with major European
and U.S. oil companies," a senior Economy, Trade, and Industry
Ministry official explained.

JAPEX, the only Japanese oil company that took part in the first
round of biddings, plans to team up with Malaysia's Petronas, as in
the first round, to aim at winning the rights to develop the Gharaf
oilfield. Armed with its joint research with the Iraqi oil ministry
since 2005, JAPEX is poised to turn the tables. At the same time,
there is some skepticism about whether the company can demonstrate
its initiative in the alliance.

China National Petroleum Corporation (CNPC) successfully obtained
the rights to develop the Rumaila oilfield by teaming up with the
UK's BP. In October, major European and U.S. oil companies
successfully concluded talks on the As Zubail and West Qurna
oilfields.

"Although the possible postponement of the general election, set for
next January, is being talked about, the major oil companies made
compromises in the amounts of money they will pay," a source
familiar with the matter said. Japanese companies cannot compete
with them in the ability to provide capital, conduct negotiations,
and gather information.

Even so, the Iraqi side pins great hopes on investment from Japan.

Al-Gadban, chairman of the council of advisers to the Iraqi prime
minister, visited Japan to attend an Iraq investment seminar, held
in Tokyo on Nov. 11. "European and U.S. majors have already opened
their offices in Basra and other cities, and the Iraqi side is
offering a range of benefits to them," Gadban said in his opening
speech at the seminar. "If Japanese companies also branch out to
Iraq, we are planning to offer similar benefits."

Japan's official development assistance (ODA) to Iraq has topped 5
billion dollars, or 435 billion yen - the second largest after the
United States.

Iraq is aiming to increase its daily crude oil output from the
current 2.4 million barrels to 6 million barrels in steps. Japan has
provided Iraq with ODA for the restoration of crude oil export bases

TOKYO 00002788 009 OF 010

that are essential for achieving that goal. Japan's level of
contribution to the postwar reconstruction of Iraq is high.

Joint efforts by the government and the private sector are bearing
fruit in the Nassiriya oilfield. Having reached an agreement on a
private tender separate from the first and second biddings, the
consortium composed of ENEOS, INPEX, and JCG is holding talks with
the Iraqi side to finalize a deal.

Estimated to produce 600,000 barrels of crude oil a day, the
Nassiriya oilfield can become the largest ever Japanese-flag
oilfield. The plan is for Japan to import half of it and to refine
the remaining half at the oil factory to be built to ship it to
Iraq.

Although Japan competed fiercely with Italy's ENI, a framework to
raise nearly 1 trillion yen for building power plants in addition to
the oil factory, in which the Japan Bank for International
Cooperation (JBIC) will also participate, won a positive
assessment.

Japan independently developed only 11 percent of the crude oil it
imported in 2007. The government's assistance is likely to be the
key to raising the rate to 40 percent.

(7) Rare metal: Public and private sectors frantic about securing
stable supply

TOKYO SHIMBUN (Page 3) (Excerpts)
December 6, 2009

Rare metals, which are indispensable for manufacturing environment
and information technology-related products, are drawing attention.
This is because a brisk demand for liquid crystal television sets,
cell phones and the next-generation automobiles are expected. Major
production areas are unevenly distributed -- China and South Africa.
Global competition to secure rare metals is becoming increasingly
fierce. Japan depends on imports for most of rare metals it
consumes. Both the public and private sectors have started moving
forward to secure stable supplies of rare metals.

Supply and demand

The Ministry of Economy, Trade and Industry (METI) in early November
launched a next-generation automobile strategy study group. Since it
is impossible to produce eco-vehicles without using rare metals, how
to secure stable supplies of rare metals took center stage at the
panel meeting.

Strong magnets blended with rare earths are used for hybrid cars and
electric cars. Lithium batteries are fitted to them. Platinum is
used as a catalyst to purify exhaust gas.

Rare metals are also used for crystal display television sets,
solar-power generation panels, LED bulbs and vibrators for cell
phones. They are now indispensable materials.

The problem is that areas of production are unevenly distributed.
China accounts for 97 percent of rare earth production in the world.
It also has overwhelming shares in the production of tungsten and
indium. South Africa produces 77 percent of the production of
platinum in the world. It is the world's greatest producer of

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vanadium.

Struggle

The depletion of rare metals could lead to a matter of life and
death for Japan's industry circles. The rumor that China will ban
exports of rare earths went around in related industries this
summer, sending a shockwave, according to a senior METI official.
When METI asked China whether the rumor was true or not through a
diplomatic channel, China replied, "We are not thinking about that
at present." The frenzy died down. However, the incident fueled
uneasiness about the future supply of the materials.

Research to find alternative materials is being carried out.
However, there is a long way to go before the commercialization of
alternative materials. The New Energy and Industrial Technology
Development Organization (NEDO) and private companies are jointly
conducting research into using zinc instead of indium and a chemical
compound of carbon and nitrogen instead of platinum. However, they
have yet to achieve stable performance.

Fruits

In the meantime, successful examples for securing rare metals abroad
have begun appearing. Sumitomo Corporation in August reached a basic
agreement with Kazakhstan's state-run company for a project to
obtain rare earths from uranium ore sediments. They will start
production as early as the end of 2010. Japan Oil, Gas, Metals
National Corporation (JOGMEC) will help finance the project.

Another successful example of efforts having borne fruit is an
exploration contract JOGMEC signed in Botswana. JOBMEC in July last
year set up a remote geological sensing center and gives instruction
in technology using a satellite to explore deposits to engineers in
that nation and its neighbors. The aim was to facilitate Japanese
companies' entry when (Japan) develops mines there, according to a
senior METI official.

ROOS

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