Japan and India have largely agreed to jointly produce rare earth metals that could be exported to Japan as soon as next year, sources close to the matter said Thursday.
Indian Prime Minister Narendra Modi, who is to arrive in Japan on Saturday for an official visit, and Prime Minister Shinzo Abe are expected to announce the production deal at their summit in Tokyo on Monday, the sources said.
At least 1,000 tons of rare earth metals, which are vital to the production of high-tech products such as hybrid cars and mobile phones, will be exported to Japan annually, they said.
According to the Nikkei financial newspaper, production will be undertaken by Indian Rare Earths, a wholly owned subsidiary of the Indian Department of Atomic Energy, and trading house Toyota Tsusho Corp.
Indian Rare Earths will produce mixed rare-earth materials that are compounds of uranium and thorium ores, according to the report.
Toyota Tsusho will then produce neodymium, which is used for electric cars and hybrid vehicles, as well as lanthanum, cerium and praseodymium from the compounds, it said.
About 2,000 to 2,300 tons, or roughly 15 percent of demand in Japan, will be made each year and preferentially exported to Japan, the Nikkei said.
The two firms, which have been negotiating for several years on rare earths exports, finally reached an agreement on price and will sign the contract on joint production in mid-September.
China, which enjoys a virtual monopoly on rare earth elements, in 2010 drastically curbed export quotas, jacking up prices and sparking trade friction with Japan.
Japanese firms have been actively diversifying their sourcing of the metals.