AUSTRALIA is at the centre of fresh efforts from Japan and the US to secure new sources of rare earth metals.
This will compensate for monopoly supplier China's recent cuts in exports.
Interest from Asian powers in rare earth projects in Western Australia and the Northern Territory has surged as industry looks for fresh sources of these minerals vital for electronics, hybrid and electric vehicles, green technology and defence equipment.
Japan's Foreign Minister, Seiji Maehara, and US Secretary of State Hillary Clinton have both sounded out the Australian government recently about the country's rare earth deposits.
And Northern Territory Treasurer Delia Lawrie, who visited Tokyo this month, said there was strong interest in the NT rare earth projects from Japanese investors.
Supplies of these metals have dwindled following China's production cuts, which came in the wake of its bitter territorial dispute with Japan.
The WA mine of Australia's Lynas Corporation will be the first supplier outside China when it comes on stream next year. A Japanese company has reached an offtake deal with Lynas but is not willing to be named for fear of repercussions from China.
Arafura Resources is hoping to join Lynas as a major supplier of rare earths. It says its Nolan's Bore project in the Northern Territory, currently undergoing a bankable feasibility study, could yield 850,000 tonnes of rare earth oxides. Like Lynas, it hopes to produce more than 20,000 tonnes of rare earth oxides a year.
Mark Pervan, ANZ's head of commodities research, said that based on the combined output of 40,000 tonnes, the fledgling Australian rare earths industry could be worth $4 billion a year. That's based on a price of $100/kg, which is about double what Lynas's rare earths would get today.
There are critics who doubt the industry's viability, saying it has the hallmarks of a classic bubble and that China could boost production again to lower prices and kill off new entrants.
Mr Pervan said he was not surprised Japan was searching far and wide for rare earths given its dependence on technology and auto manufacturing.
Ms Lawrie said her government would be back in Japan next week, and would also visit Korea, to foster fresh investment in a range of rare earth prospects.
"There continues to be particular interest from Japanese investors in the Territory's rare earths deposits to support their high-technology manufacturing industry," she said.
"The government will continue to facilitate discussions between Japanese corporations and companies exploring for rare earths in the Territory."
Other potential projects in the NT include Territory Uranium's Quantum deposit and Crossland Uranium's Charley Creek deposit. Both projects remain at an exploratory stage.