Toyota Tsusho Corp, the trading company part-owned by Toyota Motor Corp, will build a rare earth processing plant in India to secure supply sources outside China.

The rare earth processing plant will come up in the Indian state of Orissa early 2011. Production is slated to be launched by the end of the year, in collaboration with Japan's Shin-Etsu Chemical Co and Indian Rare Earths Ltd, a subsidiary of the state-controlled Nuclear Power Corp of India, the company said in a statement.

Shin-Etsu Chemical is expected to provide technical support and to engage in product trading with the rare earths plant.

This pact will help in securing approximately 3,000 to 4,000 tons annually, as they are crucial to many of the world's most advanced technologies, such as cellular phones, high performance batteries, flat screen televisions, green energy technology, and are critical to the future of hybrid and electric cars, high-tech military applications and superconductors and fiber-optic communication systems. 

Toyota Tsusho has been surveying the rare earth resource potential around the world, extensively collaborating with the National Institute of Advanced Industrial Science and Technology (AIST) and the Japan Oil, Gas and Metals National Corporation (JOGMEC), in order to secure supply sources outside of China.

China suspended shipments of the mineral to EU and US in October, media reports stated. The suspension came after there were indications that the U.S. would investigate if China was violating World Trade Organization rules by subsidizing clean energy exports and limiting clean energy imports.

China has been reducing export quotas of rare earth minerals for the past few years, citing environmental concerns. However, Wang Caifeng, who is in charge of setting up the China Rare Earth Industry Association, stated that China might slightly raise the production cap and export quota next year.

China, which mines more than 90 percent of the world's rare earth, has exported 6,000 tones, or 49.8 percent, of its total rare earth to Japan, representing 167 percent rise year on year, according to China's Ministry of Commerce.