Leaders of Vietnam and Japan decided on Sunday to cooperate in rare earth exploitation and development, the Vietnam News Agency reported.

"Vietnam will choose Japan as a partner for rare earth exploitation and development," said Vietnamese Prime Minister Nguyen Tan Dung in a meeting with his Japanese counterpart Naoto Kan here Sunday.

Kan is in Hanoi for a visit and the summits between ASEAN and partners.

At the meeting Kan welcomed Vietnam's decision, saying that Japan is in urgent need of rare earth.

Japan will cooperate with Vietnam in conducting geological survey of the rare material and transfer environmental-friendly technologies to Vietnam, said Kan.

Vietnam's rare earth resources are mostly in northern provinces like Lai Chau, Yen Bai, Lao Cai and Nghe An.

The country has conducted exploitation of rare earth but it is only in tiny quantity due to lack of advanced technology.

Rare earth can be used in many industries, including electronic, automobile manufacturing, semi-conductor production and petrochemistry.

During Sunday's meeting between the two prime ministers, Dung also told Kan that Vietnam has decided to choose Japan as its partner to construct Vietnam's second nuclear power plant.

Vietnam is speeding up resources development to meet the growing demand of its economy.

In a related development, Vietnam and Russia inked a deal on Sunday to construct Vietnam's first nuclear power plant.

Vietnam and Japan have seen increasingly closer economic links over the past years, with the latter being a large official development assistance (ODA) provider to Vietnam.