Beijing moves to tighten rare earth production

China has created a "state planning" zone covering the country's biggest rare earth mines in a move to cut production of the vital rare mineral elements used for numerous high-tech goods, the official Xinhua news agency reported on Thursday night.

Exploration and mining of rare earth resources in the zone, an area of 2,500 square kilometres of Jiangxi province in southern China that contains 760,000 tonnes of rare earth mineral deposits, will be subject to stricter state scrutiny and regulatory checks, Xinhua said, citing the Ministry of Land and Resources in Beijing.

"China's rare earth reserves only account for a third in the world but China supplies more than 90 percent of rare earths globally -- that's obviously not sustainable," a ministry official was quoted as saying.

Rare earth minerals are used in smartphones and hybrid cars as well as in the aerospace industry among other high-technology products.

China, which produces about 97% of the global supply of the minerals, cut export quotas for the minerals by 40% in 2010, a move that alarmed buyers and trading partners.

China's actual rare earth exports in 2010 fell about 10% from 2009.

Beijing has cut export quotas for the first half of 2011 by 35% from the first half of last year, although total quotas for this year have not yet been announced.

China says the export quota cuts and tightened control over production will prevent reckless exploitation of the deposits and and will reduce pollution resulting from the mining process.

(Reporting by Zhou Xin and Ken Wills)