US, Japan leaders ink rare earths, nuclear power tie-ups ahead of Trump-Xi meet this week

By Trevor Hunnicutt and Katya Golubkova

TOKYO (Reuters) -Japan and the United States agreed to tie-ups on new-generation nuclear power reactors and rare earths, as Tokyo seeks a way back to export markets for its nuclear technology and both look to reduce China's dominance over key electronic components.

U.S. President Donald Trump and Japanese Prime Minister Sanae Takaichi signed a framework agreement on Tuesday for securing the supply of rare earths used in everything from cars to fighter jets.

They signed the documents, which included critical minerals, at the neo-Baroque-style Akasaka Palace in Tokyo, beneath three chandeliers swathed in gold ornamentation, as aides applauded.

They made no direct public mention of China, which processes more than 90% of the world's rare earths, making it the source of each country's concern about its mineral supply chain. Beijing has recently expanded export curbs.

Trump and Chinese President Xi Jinping are set to meet on Thursday on the sidelines of the Asia-Pacific Economic Cooperation in South Korea to discuss a deal that would pause steeper U.S. tariffs and Chinese rare earths export controls.

Japan and the United States would use economic policy tools and coordinated investment to speed "development of diversified, liquid, and fair markets for critical minerals and rare earths", the White House said in a statement.

They aim to provide financial support to selected projects within the next six months, it added.

Both countries would consider a mutually complementary stockpiling arrangement and cooperate with international partners to ensure supply chain security, it said.

While China dominates global rare earth extraction, the United States and Myanmar control 12% and 8% respectively, says Eurasia Group, with Malaysia and Vietnam covering processing - where China is also the top player - of another 4% and 1% each.

NUCLEAR POWER, OTHER AREAS

In a factsheet for the talks, Japan mentioned mutual interest to cooperate in construction of new generation AP1000 nuclear reactors and small modular reactors (SMRs).

These could involve Japanese companies such as Mitsubishi Heavy Industries, Toshiba Group and others, along with other cooperation areas.

Nuclear power, including next-generation reactors, as a matter of a greater energy security, affordable power supply and export technology, is among the top priorities of Takaichi, who became Japan's first female prime minister last week.

Japan shut down all its reactors after the Fukushima Daiichi nuclear disaster, caused by a powerful 2011 earthquake and subsequent tsunami. China, France, South Korea and Russia, currently dominate global exports of nuclear power technology.