Japan and Vietnam are set to sign an agreement to jointly develop rare earth mines in Vietnam.

The agreement comes after China stopped shipments of rare earth minerals to Japan following a diplomatic row.

Under the agreement, which is to be confirmed on 31 October, Japan will provide exploration and smelting technologies for mining in Vietnam.

Japan’s Sojitz Corporation said it is conducting an advanced feasibility study for rare earth development in Vietnam, while Sumitomo Corporation aims to start its shipment of rare earth from Vietnam to Japan in 2013.

The two projects will produce at least 7,000t of rare earth minerals a year, and will meet more than 20% of Japan’s demand for rare earth.

China accounts for about 97% of the world’s total production of rare earth elements, about half of which are exported to Japan, reports Nikkei.