Rare Earth Resource Dispute Fuels China-Japan Island War

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“‘Diaoyu Islands Should Not Be Covered by Security Treaty Between the United States and Japan’ sounded strangely similar to the press statements of the PRC [People’s Republic of China]’s Foreign Ministry,” wrote Daniel McGroarty in a recent article dealing with the current China-Japan ‘war.’

McGroarty, principal of Carmot Strategic Group, an issues management firm in Washington, D.C., also founded American Resources Policy Network, a think-tank devoted to identifying solutions to reduce America’s dependency on rare earth and other strategic minerals.

MetalMiner recently spoke with Dan, who has also spoken at previous MetalMiner events, about the geopolitical ramifications of the escalating conflict over some very small islands between China and Japan – namely, which nation will lay claim to the extensive rare earth metals (and other resources) thought to sit in the surrounding seabed of the East China Sea.

MetalMiner: We first wrote about this rare earths conflict two full years ago and can’t help but think that the media has portrayed this story as a giant geopolitical issue. Is it possible that the dispute is more fundamental – “Two Countries Lay Claim to Islands to Gain Access to the Mineral-Rich Seabed?” Is this really a fight for mineral resources more than anything else?

Dan McGroarty: The value of these islands is in extending Japan or China’s reach to the East China Sea – the argument is over open-ocean rights, fishery rights, oil and gas rights and even mineral rights. Way out in the Pacific, Japan has done some dredging in the open ocean off an island that they control. They discovered a huge bed of rare earths as well as cobalt, manganese and copper. Part of a larger resource strategy that China is pursuing is laying claim to more coastal area in both the South China Sea and the East China Sea.

It’s interesting that both China and Japan have filed for licenses to conduct seabed exploration for “cobalt-rich ferromanganese crusts” – yet another indication they are thinking beyond a general dispute. But China and Japan’s dispute is not unique. Another interesting dispute involves a rock outcropping, Hans Island, between Canada and Denmark, in which both countries have fought for control. These ocean rights and seabed claims represent perhaps the last large-scale “territorial” disputes on the planet.

Part Two of the interview touches more on resource nationalism.

See where current rare earth prices are now.

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