South Korean government plans to stockpile rare metals in 2006

The South Korean government plans to launch a stockpile of 13 rare metals and ferroalloys in 2006, an official in charge of metals at Ministry of Commerce, Industry and Energy said on Tuesday.

The government plans to stockpile molybdenum, tungsten, chrome and ferrochrome, cobalt, manganese and ferromanganese, vanadium and ferrovanadium, indium, titanium, antimony, niobium, tungsten, thallium, and selenium for amounts enough for two months consumption in the country, the official said.

The government has decided to stockpile the metals in 2005. The budget has been provided to stockpile the metals in 2006, but actual sourcing of the metals has not started yet, the ministry official said.

The government is currently discussing whether to have the stockpiling managed by South Korea's state run Korea Resources Corporation, or the Defense Procurement Agency, the official said.

Several market sources in Japan said they are taking note of rare metal stockpiling moves by Asian governments as they may cause the regional spot metal prices to rise.

The Japanese government currently stockpiles cobalt, vanadium, nickel, tungsten, manganese, chrome and molybdenum for 21-32 days of consumption. Japanese industry sources have voiced concerns that the current stockpiling levels would not support the country's industry in times of supply shortages. Koichi Fukushima, the former chairman of Japan Mining Industry Association, said in January this year: "There are views that the current rare metal stockpile levels are too low. The national stockpile of oil products is equivalent to 90 days of consumption, and metal stockpiles should be at that level."

One Japanese trader said he also expects the Chinese government to adapt similar policies of stepping up metal stockpiles.