A chronic shortage of rare earths, vital for making a range of high-technology electronics, magnets and batteries, has encouraged mining projects for them in recent years.
China, which accounts for 97 percent of global rare earth supplies, has been tightening trade in the strategic metals, sparking an explosion in prices.
Japan, which accounts for a third of global demand, has been stung badly, and has been looking to diversify its supply sources, particularly of heavy rare earths such as dysprosium used in magnets.
Kato said the sea mud was especially rich in heavier rare earths such as gadolinium, lutetium, terbium and dysprosium.
"These are used to manufacture flat-screen TVs, LED (light-emitting diode) valves, and hybrid cars," he said.
Extracting the deposits requires pumping up material from the ocean floor. "Sea mud can be brought up to ships and we can extract rare earths right there using simple acid leaching," he said.
"Using diluted acid, the process is fast, and within a few hours we can extract 80-90 percent of rare earths from the mud."
The team found that sites close to Hawaii and Tahiti were especially rich in rare earths, he said.
He gave no estimate of when extraction of the materials from the seabed might start.
(Reporting by El Tan in Hong Kong and Yuko Inoue in Tokyo; Editing by Michael Watson)