BEIJING - Rare earths production in China, as a percentage of the global total, will fall sharply from the current 95 percent to 60 percent within two years, as foreign players resume mining of the precious minerals, an industry expert said.
Wang Caifeng, a former official at the Ministry of Industry and Information Technology (MIIT), told China Daily on Tuesday that foreign output will reverse the global reliance on China's exports within two years.
Wang is now in charge of establishing China's rare earths industrial association.
Rare earths, a group comprising 17 elements or metals, are some of the most sought-after materials in industry and are used in a number of high-tech areas, such as wind turbines, missile guidance systems, hybrid car batteries and mobile phones.
China, which sits on just 30 percent of global reserves, has seen reserves depleted and has suffered environmental damage due to rampant mining.
The United States, Japan and some European countries have complained previously about China reducing production.
The US and Australia, which also have sizeable reserves, slashed production because of lower prices as a result of overproduction in China.
But as China decreases its exports to preserve the minerals and protect its environment, prices on the international market have surged, forcing countries to seek alternative sources and those with reserves to consider restarting or boosting production.
California-based Molycorp Inc, the only rare earths producer in the US, is expected to produce 20,000 tons annually, compared with US demand of 16,000 tons.
Australian miner Lynas is also building a rare earths plant in Malaysia.
China produced more than 120,000 tons of rare earths last year, with 87,000 tons for domestic use and 34,600 tons for export. Production quota this year is expected to grow by 5 percent, Wang said.
China has implemented stringent policies and reduced its export quota to protect the resource from being overexploited and to gain more bargaining power over pricing in the global market.
"Global supply of the metals, in particular the light type that can be found abundantly overseas, will surpass demand soon. Those countries with large deposits will reshape the supply scenario," Wang Hongqian, general manager of China Nonferrous Metal Industry's Foreign Engineering and Construction Co (NFC), told China Daily earlier.
Wang Caifeng said the industry association will help regulate the chaotic market and establish a reasonable price mechanism.
"The association has completed preparation work and is awaiting approval from the MIIT. Hopefully it will be launched within two months," Wang said.
"We will be on the frontline in helping to establish a price mechanism, and to further regulate the consolidation of the scattered industry while offering our assistance to companies seeking international cooperation," she said.
The establishment of the rare earths association is part of government efforts to tighten its grip on the precious metals.
The State Council, or the Cabinet, said in May that within two years the three biggest companies should control 80 percent of the heavy rare earths in the south of the country.
China Minmetals, along with Aluminum Corporation of China Ltd (Chinalco), Ganzhou Rare Earth, and NFC, are widely speculated to be candidates that could develop into the three conglomerates.
Wang Jionghui, Minmetals' assistant president, told China Daily that the company has urged the government to establish stockpiles of heavy rare earths to prevent overexploitation and increase the country's influence over pricing.
China has already started to stockpile light rare earths in the Inner Mongolia autonomous region, led by Baotou Steel Rare-Earth.
Light rare earths are found mostly in Inner Mongolia. The more expensive heavy varieties are scattered across a number of provinces.
Jiangxi, Fujian, Guangdong, Hunan, and the Guangxi Zhuang autonomous region are the five areas in southern China rich in heavy rare earths.