UPDATE 1-Toshiba eyes rare metals venture with Kazatomprom

* Venture to be set up by the end of the year

* Partnership to include dysprosium, neodynmium, rhenium (Adds details, background)

TOKYO, Oct 23 (Reuters) - Toshiba Corp (6502.T: Quote, Profile, Research) said on Friday it aims to set up a rare metals joint venture by the year's end with Kazakhstan state-owned firm Kazatomprom, as growing sales of electric and hybrid cars spurs demand for the materials.

Toshiba, which has teamed up with Kazatomprom on uranium mine development, plans to expand their partnership to include rare metals, such as dysprosium, neodymium and rhenium -- byproducts of uranium production.

Neodymium, for instance is a key component used to make high-power magnets in electric motors of hybrid cars, such as Toyota Motor Corp's (7203.T: Quote, Profile, Research) Prius and Honda's (7267.T: Quote, Profile, Research) Insight.

Rare earth metals are used in a wide range of products, from cellphones and laptops to generators for wind turbines, and Japanese firms and the government are hurrying to secure reserves as China's appetite for the metals grows.

Toshiba and Kazatomprom, which holds 10 percent of Toshiba's U.S. nuclear unit Westinghouse, last year said they would consider possible ways to work together on rare metals such as beryllium and tantalum for use in nuclear power plants. (Reporting by Mayumi Negishi; Editing by Edwina Gibbs)