Kazakhstan, fresh from becoming the world's top of uranium producer, plans to produce a first batch of 1,500 metric tons of rare earths next year as it enters the race to compensate the shortfall of Chinese exports, a senior official said Monday.

The 15-odd rare earths "will be in the form of bulk concentrate" assembled at a joint venture called Summit Atom Rare Earth Company (SARECO) that was established last year with Japan/s Sumitomo Corp. (SSUMY), said Sergey Dara, director of strategic development at Kazatomprom, the state nuclear company that also oversees rare earths and rare metals.

They will be exported to Japan and other countries.

Separately, Kazatomprom and Toshiba Corp. (6502.TO) "will shortly establish another joint venture called KT Rare Metals Company to produce rare metals," Dara said. Initially, it will cooperate with Kazatomprom's Ulba Metallurgical Plant, located in Usk Kamenogorsk, in eastern Kazakhstan.

Dara spoke a few days after presidents Nursultan Nazarbayev of Kazakhstan and Nicolas Sarkozy of France signed in Paris an agreement to create a strategic partnership between Kazatomprom, the French Bureau for Geological and Mining Research (BRGM), France's public institution in earth science applications, and the Paris-based European Company of Monitoring and Strategic Consulting (CEIS), a private firm.

The agreement paves the way for cooperation in studying the geology, extraction and distribution of rare and rare earth metals, along with the feasibility of mining and processing them.

In March, Kazatomprom's Chairman, Vladimir Shkolnik, signed a memorandum of understanding with Atomredmetzoloto (ARMZ), the mining arm of Russia's nuclear holding company, Rosatom, to jointly produce rare metals and rare earths.

Shkolnik noted at the time that global demand for rare earths stands at 130,000 tons a year and domestic demand in China, the leading producer, is expected to exceed its output, creating a global shortage. "This is exactly the right time to enter the market and become a major player," he said.

-By Christopher Pala, contributing to Dow Jones Newswires; +7 495 232-9192; chrispala@gmail.com

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