According to Guotai Junan Securities Co, rare earths will extend rallies in China as the government takes further steps to safeguard resources, outweighing the possible impact on prices of slower economic growth.

Mr Sang Yongliang, the company's metals and mining analyst, wrote in a June 3rd 2011 report that delays in projects coming on stream from the US and Australia will ensure that China continues to be biggest producer until at least 2013.

China has clamped down on rare earth mining and cut export quotas to protect the environment. The moves boosted prices and sparked concern among overseas users such as Japan about access to supplies. Rare earths, 17 chemically similar elements, are used in wind turbines, hybrid cars and guided missiles.

Mr Sang wrote that "The government is serious about ensuring the strategic security of rare earth metals and any additional measures taken on this will continue to be the main driver of prices. Rare earth prices will be able to withstand pressures from any slowdown in the economic environment."

According to data from Shanghai Steelhome Information, among rare earths, the prices of neodymium, lanthanum, dysprosium, cerium, terbium, yttrium and praseodymium were at all time highs in Shanghai on June 3rd 2011.

The State Council said in a development plan on May 19th 2011 that taxes on mined rare earths will be increased by a big margin. China will also raise standards for exporters and won't approve project expansions to curb overcapacity and illegal mining.

According to a June 3rd 2011 statement on the Baotou city government website, the northern province of Inner Mongolia, which accounts for more than 75% of the country's rare earths output, aims to complete the consolidation of 35 producers under Baotou Iron and Steel Group Co this month.

(Sourced from www.bloomberg.net)