Japanese and Korean firms look to Brazil for rare metal

A consortium of Japanese and South Korean firms are to take a share of a Brazilian rare metal mining company.

The group includes Japan's Nippon Steel and South Korea's Posco and National Pension Service (NPS).

They will pay $1.95bn (£1.19bn) for a 15% stake in Brazil's Companhia Brasileira de Metalurgie e Mineracao (CBMM).

Japan and South Korea are joining up to secure supplies of valuable minerals for the manufacture of hi-tech goods.

CBMM produces niobium, a rare metal used in the manufacture of high-grade steel for cars and other products.

Sourcing rare metals and expecially so-called rare earth elements has become a highly politicised issue.

Recently China reduced exports of rare earth elements because of growing domestic demand; the country controls 90% of the world's rare earth supply.

Niobium, however, is in a different category, with about three quarters of annual production coming from Brazil and another 7% coming from Canada.

Japan and South Korea are both big users of the rare metals and rare earth elements, which are key in the manufacture of goods such as flat screen televisions and hybrid cars.

A spokesman for South Korea's National Pension Service said that Japanese investors including Nippon Steel, JFE Holdings and Sojitz Corp will buy a 10% stake in CBMM. South Korea's Posco and NPS meanwhile will jointly buy 5% of the unlisted Brazilian company.