The Chinese government has stepped up efforts to further restrict rare earth production and plans to have mining and refining firms in the nation adhere to a government-set production schedule, it has been learned.
The Japanese government is wary of China's move, as Japan's procurement volume of rare earths will highly likely shrink if China further restricts output.
China produces 97 percent of the world's rare earths, essential materials in the production of high-tech products, while Japan imports of rare earths from China accounted for about 82 percent of the nation's total imports in 2010.
According to the Economy, Trade and Industry Ministry, China's planned production of rare earths in 2010 was 89,200 tons, but the actual volume was estimated at between 120,000 tons and 130,000 tons--about 30 percent to 40 percent more.
The Chinese government has instructed rare earth-producing companies to conduct on-the-spot inspections to facilitate accurate accounting of the government's output quotas, sources said.
Companies that exceed the government-set limit will face punishments, such as being ordered to halt production or have their facilities confiscated, sources said.
By increasing its control of rare earths production, which are also considered strategic goods, the Chinese government aims to keep prices high. Some rare earth companies have downsized their production systems, observers said.
The Chinese government has already set a rare earths export ceiling in order to safeguard its resources and environment. The nation cut its export quota by 20 percent in 2008 from the previous year, and 40 percent in 2010 from a year earlier.