Japan, Vietnam to co-develop rare earths - Nikkei

TOKYO Oct 22 (Reuters) - Japan is set to agree with Vietnam later this month on the joint development of rare earth metals to reduce its dependence on China for the strategic minerals, the Nikkei business daily said on Friday.

The agreement will be reached when Japanese Prime Minister Naoto Kan and his Vietnamese counterpart, Nguyen Tan Dung, meet in Hanoi on Oct. 31, the newspaper said.

The report comes as concerns simmer that Beijing is holding back shipments of rare earth minerals that are vital for electronics goods and auto parts.

Sino-Japanese relations deteriorated sharply last month after Japan detained a Chinese trawler captain whose boat collided with Japanese patrol ships near a chain of disputed islands -- called Senkaku in Japan and Diaoyu in China.

China accounts for about 97 percent of the world's total production of rare earth elements, about half of which are exported to Japan.

Japanese trading houses Toyota Tsusho Corp (8015.T) and Sojitz Corp (2768.T) are already preparing for rare earth development in Vietnam, while Sumiotomo Corp (8053.T), another trading firm, aims to start rare earth shipment to Japan from Vietnam as early as 2013, the Nikkei said.

Kan and Dung are also expected to agree on cooperation on the construction of nuclear power plants and high-speed railways in Vietnam, the paper said.

(Reporting by Kiyoshi Takenaka; Editing by Joseph Radford)