December 21, 2010 / 7:34 AM / 9 years ago

UPDATE 1-Hitachi Metals:talking with Molycorp on rare earth JVs

* Says to reach agreement in Q1 on joint ventures

* Japanese firms seeking new rare earth sources

(Adds detail, background)

TOKYO, Dec 21 (Reuters) - Japan’s Hitachi Metals Ltd (5486.T) said on Tuesday it is in talks with Molycorp Inc MCP.N to jointly produce rare earth metals in the United States where demand is seen rising in line with growth in the electric vehicle market.

The move comes as Japanese rare earth suppliers and dealers are racing to diversify their procurement sources after shipments from dominant producer China stalled when it cut export quotas.

Japanese firms have typically been heavily reliant on China for rare earth metals, which are needed to build hybrid vehicles, wind turbines and MP3 players.

Japanese trading house Sumitomo Corp (8053.T) said this month it would invest $130 million in Molycorp to secure a seven-year supply of the minerals. [ID:nN10286929]

Sojitz Corp (2768.T) last month reached a procurement deal with Australian miner Lynas Corp (LYC.AX). [ID:nTOE6BK00L]

Hitachi Metals said in a statement on Tuesday it and Molycorp, a U.S. rare-earth producer, would reach an accord during the first quarter of 2011 on setting up joint ventures to produce neodymium magnet alloys and nodymium magnets.

Hitachi Metals and Molycorp will jointly aim to meet rising demand for neogymium magnets for gas-electric hybrid vehicles, electric vehicles, wind turbines and industrial motors, Hitachi Metals said.

Toyota Tsusho Corp (8015.T), a trading house affiliated with Toyota Motor Corp (7203.T), said this month it will build a rare earth processing plant in India and start shipping the minerals to Japan in 2012. (Reporting by Yumiko Nishitani; Editing by Joseph Radford)

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