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Monday, June 25, 2012
Liberating Japan's resources
Japan has long been characterized as a nation with virtually no natural resources like oil, natural gas, coal, iron and copper. More than 125 million people live on land area ranking only 61st in the world in terms of size.
But it has been proven of late that Japan has two huge potential areas rich in natural resources, which have so far remained untapped. One is the oceans surrounding its archipelago and the other, forests covering large portions of its land.
Japan's territorial waters and exclusive economic zones, the latter including continental shelves with exclusive rights for exploitation, cover 4.47 million square kilometers — the sixth largest in the world behind countries like the United States, France, Australia and Russia but exceeding China, Brazil and India.
While its land area is small, 68.2 percent of it is covered by forests — the fourth highest percentage in the world after Bhutan, Finland and Laos, and far ahead of the U.S. (33.1 percent), Britain (31.9 percent), France (28.6 percent) and China (22 percent).
All these indicate that Japan has huge potentials to become a country with abundant natural resources. But bringing them to reality would require drastic changes in the mind-set of both lawmakers and bureaucrats.
Late in April, Japan received good news that the United Nations Commission on the Limits of the Continental Shelf ruled that 310,000 square km around the Okinotori islet, located 1,740 km south of Tokyo, constitutes a continental shelf belonging to Japan. This gives Japan additional area to exercise the exclusive right to mine submarine natural resources.
In early February, the 50,000-ton scientific drilling ship Chikyu (Earth) started prospecting methane hydrate reserves off Aichi Prefecture. It can drill up to 7,000 meters deep. The Japan Oil, Gas and Metals National Corp. (JOGMEC) estimates that methane hydrate reserves around the Japanese archipelago could provide supplies matching the nation's natural gas consumption for more than 100 years.
A recent technological breakthrough has made it much easier and less expensive to extract methane gas from submarine methane hydrate.
In March, the drilling ship Hakurei, operated by JOGMEC, made a debut before the mass media. It drills into deep seabeds in search of hydrothermal deposits created by underwater volcanic activities. These deposits are said to contain large amounts of gold, silver, manganese, chromium, nickel and other heavy metals used to make various types of alloys.
Big deposits of manganese have been confirmed to exist in the areas around the Okinawa and Minamitori islands. Other research shows that rare metals are contained in hydrothermal deposits and continental shelves.
The possibility of the existence of submarine natural resources has prompted China to lock horns with Japan over the Senkaku Islands in the East China Sea and with Vietnam, the Philippines and Malaysia over the Spratly and Paracel Islands in the South China Sea.
If mineral deposits under the seabed can supply Japan with abundant natural resources, its forests have big potential for offering many employment and export opportunities.
China and South Korea's demand for high-quality lumber is rising fast. China's demand cannot be fully met by its domestic forest resources, which are concentrated in the inland provinces of Yunnan and Sichuan and in Heilongjang Province to the north and face problems of high transportation costs.
Japanese forests have a wide variety of trees of high quality. Japan could be a lumber-exporting country like Canada, Russia and Indonesia. But the aging of forestry workers and stagnant domestic prices have prevented Japan's forestry industry from growing to its potential.
If Japan accepted foreign workers for logging, improved forest roads and developed heavy machinery suited for logging and transportation in Japanese forests, the potential for exporting lumber to China and South Korea at competitive prices would be excellent.
A byproduct of developing Japan's forestry will be the export of fresh water, which abounds in Japan's forest areas. Indeed, a growing number of inquiries are coming to Japan from oil-producing countries in the Middle East on the possibility of filling oil tankers on their trip back with high-quality water from Yakushima Island near the southern tip of Kyushu, known for its abundant rainfall and cedar trees.
But technological development and investment alone are not sufficient to attain full utilization of submarine and forest resources. What is needed most of all is to dispel the perception that Japan is a resource-poor country. This misconception has prevented investment in the exploitation of these resources and blocked efforts to increase cost competitiveness.
Although the government has started moves to work toward exploring submarine resources, the target date for commercialization of undersea methane hydrate deposits is set as far back as 2018. That's because government planners are trying to gain rights to build oil wells abroad and ensure a stable supply of liquefied natural gas, on one hand, while exploiting submarine resources, on the other.
It is high time for Japan to start developing potential resources in and around it, if it wants to avoid chronic trade deficits arising from its heavy reliance on imported energy sources like liquefied natural gas.
Last year, China's State Forestry Administration proposed sending thousands of forestry workers to Japan to help promote Japanese lumber exports to China and to create job opportunities for China's unemployed. Japan rejected the proposal apparently because the idea was so novel that Tokyo was unable to appreciate its significance.
Such stagnant, inflexible ways of thinking on the part of Japanese politicians and bureaucrats have become an impediment to Japan becoming a resource-rich nation.
This is an abridged translation of an article from the June issue of Sentaku, a monthly magazine covering Japan's political, social and economic scenes.