China fights illegal mining and export of rare earth metals

China is stepping up efforts to curb illegal mining and export of rare earth metals by establishing a system to authenticate the supply of growing materials used in modern electronics, defense industries and renewable energy sources.

Analysts and other suppliers to the rare earths market say illegal activities have caused the price of these materials to drop more than 10 percent last year, and they continue to flood the market. The latest figures released by the China Rare Earth Industry Association show that about 90 percent of the country's producers are currently operating at a loss, and many of them may close this year.

Beijing has been trying to block the illegal extraction and export of rare earths for years. But smuggling, environmental devastation and dangerous artisanal mining practices continue to rage. It is estimated that exports from illegal mining through networks in Vietnam and Hong Kong have reached 40,000 tons per year.

In 2014, the Chinese government decided to strengthen its rare earths industry by consolidating its activities into six large organizations. The move aims not only to control illegal mining and pollution, but also to modernize China's largely low-tech industry. This process will be over in July this year.

Beijing is also poised to impose a host of new environmental regulations, including green export certificates and new taxes, that are based on the value of minerals rather than volume as is currently the case.