Bloomberg reported that China cut mining rights for the materials by about half to 65 nationwide to help the industry consolidate and create bigger producers.

Mr Chen Zhanheng deputy secretary general at the Association of China Rare Earth Industry said that rare earth mining rights in Ganzhou of Jiangxi province were reduced to 44 from 88.

The Ministry of Land and Resources said that the western province of Sichuan had its rights lowered to seven from 18 while the Inner Mongolia based Baotou Iron & Steel Group Company absorbed its local rivals.

The US, the European Union and Japan complained in March to the World Trade Organization about China’s limits on exports of rare earths, a group of 17 chemically similar elements used in wind turbines and hybrid cars with the US saying the curbs create harmful disruptions and distortions in global supply chains. China’s export quotas, in place since 1999 and its efforts to boost consolidation are aimed at conserving resources and protecting the environment.

Mr Chen said that reducing mining rights helps streamline rare earth development. Still illegal mining is a bigger issue that the government needs to tackle. China recently arrested 19 suspects for alleged illegal mining in Xinfeng in Guangdong province and punished 11 officials for lack of supervision. Some of the output from illegal mines was smuggled to neighboring countries for processing after China tightened its regulation of domestic smelters.

Average prices of rare earths have fallen more than half from 2011’s record levels as consumers reduced purchases or sought alternative materials. Neodymium oxide which is used in mini hard drives in laptops and headphones in iPods, traded at USD 110 as of July 16th 2012. The price surged to USD 234.40 per kilogram in 2011 from USD 19.12 in 2009.

Source - Bloomberg

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