China's attempts to cement government control over rare earth exports seemed to backfire as industry have dumped inventory in the market, causing prices to crash from early highs of CNY 300,000 per tonne in a matter of weeks.

The price tumbled to CNY 100,000 per tonne in recent days in spite of a halt to production of China's two biggest domestic rare earth producers including Inner Mongolia Baotou Steel Group Rare Earth Hi Tech.

Reports have circulated that China will begin to tighten its reins over the coveted rare earths industry by issuing special invoices to local producers and smelters that have passed environmental standards.

Beginning this month, only those rare earths producers and smelters with state issued special invoices can manufacture, make inland transfers and export.

According to the Ministry of Commerce, the new system only qualified players will receive the special invoice and provide it to downstream buyers. Qualified miners and smelters will be checked for their technical and environmental track record.

Industry sources said that this in effect can provide the government the data if industry inventory is enough and purchases from illegal sellers can be tracked and penalized.

Mr Lin Dongru secretary general of the Chinese Rare Earth Society said that the introduction of the specialized invoices means that the government will be better able to manage the production and sale of rare earth minerals.

(Sourced from community.nasdaq.com)