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Japan will expand the scope of its rare metal reserves to include such substances as platinum, indium and rare earth metals as increased demand from China has triggered concern about global supply shortages, according to government sources.

The Natural Resources and Energy Agency under the Ministry of Economy, Trade and Industry will review its policy on metals for the first time in about 20 years to ensure a stable supply of rare metals that are used in manufacturing items with cutting-edge technology, the sources said earlier this week.

Platinum is used in the production of fuel cells and emission purifiers in vehicles, while indium and rare earth metals are indispensable in making liquid-crystal displays and hybrid cars.

The output of these rare metals is small and production areas are disproportionately located. Platinum mostly comes from South Africa, while large amounts of indium and rare earth metals are produced in China.

Due to the small transaction volume, prices of those metals could fluctuate wildly. According to nonferrous metal industry officials, 1 kg of indium was traded at $100 in 2003, but the price rocketed to $1,000 in 2005.

There has been increasing pressure on the government from Japanese industries to boost rare metal stockpiles because they believe China will soon start securing those metals as it aims to nurture leading-edge industries.

In addition to expanding the scope of reserves, Japan will also support mining development by Japanese companies and promote the creation of alternative materials, the sources said.

The government will also encourage efforts to develop technologies to reduce the amount of rare metals used in producing high-tech items and will establish a recycling system to recover metals from disposed products, they said.

In fiscal 1983, Japan began stockpiling seven types of rare metals, including manganese and molybdenum, used for the production of iron and steel articles. In reviewing the current policy, the government will also study whether to stop storing metals whose supply shortage risks have diminished, they said.

The five other metals are nickel, chromium, cobalt, tungsten and vanadium. At present, Japan has reserves that would meet domestic demand for 60 days, with 42-day stocks controlled by the state and 18-day reserves kept by the private sector.

The government-linked Japan Oil, Gas and Metals National Corp. manages the state-controlled reserves at a warehouse in Takahagi, Ibaraki Prefecture.

The energy agency launched a study group last December on whether to change the current reserve policy, with rare metal suppliers and users, including mining companies and automakers.

The Advisory Committee for Natural Resources and Energy, a METI panel, is soon expected to start discussions on the policy review — possibly next month — to reflect the policy change in the ministry’s “new energy strategy” to be compiled in May, according to the sources.

The Japan Society of Newer Metals, an association of rare earth processing companies, welcomed the planned expansion of Japan’s rare metal reserves but expressed concern about the possibility that private firms will be obliged to stockpile more metals, as it could be a financial burden to them.