China blocks mineral exports to Japan over captain's arrest

• Wen Jiabao asked Japan's PM Naoto Kan to release captured skipper as anti-Japanese sentiment flares in China. Picture: Getty

The minerals - all rare earth elements - are vital for the production of hybrid cars, wind turbines, and guided missiles.

Chinese customs officers are preventing ships loading the minerals at China's ports, industry officials said yesterday.

On Tuesday, Chinese pime minister Wen Jiabao personally called for Japan's prime minister Naoto Kan to order the release of the trawlerman and threaten unspecified actions if Japan did not comply.

The captain was detained after his boat collided with two Japanese coastguard ships about 40 minutes apart as he tried to fish in Japanese waters.

A spokesman for the Chinese commerce ministry declined to discuss its trade policy on rare earths, saying only that Mr Wen's comments reflected its current policy.

Any official statement barring exports would allow Japan to file a complaint with the World Trade Organisation - but simply obstructing the loading of key exports would make it much harder for Japan to make a formal challenge.

China mines 93 per cent of the world's rare earth minerals, and more than 99 per cent of the world's supply of some of the most prized rare earths, which sell for hundreds of pounds for each pound weight. Dudley Kingsnorth, the executive director of the Industrial Minerals Company of Australia, a rare earth consulting company, said that several industry executives had already expressed worries about the export ban.

The executives have been told that the initial ban would last through to the end of the month and that Beijing would reassess then whether to extend it if the fishing captain still had not been released, Mr Kingsnorth said.

"By stopping the shipments, they're disrupting commercial contracts, which is regrettable and will only emphasise the need for geographic diversity of supply," he said.

Industry officials said mainland China's customs agency had notified companies they were not allowed to ship to Japan any rare earth oxides, rare earth salts or pure rare earth metals.

A senior Japanese foreign ministry official, who declined to be named, said that the Japanese government had not yet received any notice from China regarding the suspension. The official said, however, that the government had repeatedly asked China to not restrict its exports of rare earth elements, citing the severe consequences such a move would have on global production and trade.

Toyota, which makes the Prius hybrid car, had not yet received any information on an embargo and was unable to comment, a spokesman in Tokyo, Masami Doi, said.Japan has been the main buyer of Chinese rare earths for many years, using them for a wide range of industrial purposes, such as making glass for solar panels. They are also used in small steering-control motors in conventional petrol-powered cars as well as in motors that help propel hybrid cars such as the Prius.

The Chinese export halt is likely to prompt alarm in Japan, which has few natural resources and has long worried about its dependence on imports.

The United States was the main supplier of oil to Japan in the 1930s, and the imposition of an American oil embargo on Japan in 1941, in an effort to curb Japanese military expansion, has been cited by some historians as one of the reasons for the attack on Pearl Harbour.