The statement follows an announcement Wednesday from China's State Council, after a meeting led by Premier Wen Jiabao, of a five-year policy guideline for the rare earth industry.

While the council didn't provide details, Chinese state-run news agency Xinhua quoted it as saying, "The industry should maintain rational production and inventory control, make better use of domestic and overseas markets and resources and have active international cooperation for a healthy and sustainable development."

Yang Wanxi, director of a government-connected rare earth institute, told Xinhua that Beijing's latest announcement shows its determination to reshuffle the sector.

"The rare earth industry regulation and management involves several ministries, which, sometimes, have inconsistency in policy making," he said, adding that the launch of the policy guideline would advance conformity in policy making for the industry.

A U.S. Geological Survey estimate shows that China has about half the world's 110 million tons of rare earth deposits. Yet China produces 95 percent of the world's supply of rare earths, a collective name for 17 minerals.

Rare earths are crucial for green energy and high-tech components such as wind turbines, low-energy light bulbs, batteries for hybrid and electric cars, lasers, fiber-optic cables, cell phones and flat-screen monitors. The elements are also used for military applications, such as missiles.

China's tightening grip on the minerals has raised concern among foreign markets over security of supplies.

China has steadily reduced rare earth export quotas since 2006 and has imposed steep export taxes on the minerals. Importers were alarmed when Beijing imposed an unannounced embargo last September for two months on shipments of unprocessed rare earths to Japan because of a diplomatic dispute. Some shipments to the United States and Europe were also disrupted for a week in October.

Furthermore, Beijing has reduced the export quota for rare earths by 25 percent for the first half of 2011.

China has long maintained that environmental concerns are the reason for the cuts. Wen told the State Council meeting Wednesday that China's rare earth industry had been harmed by illegal mining and "chaotic" exports.

English newspaper China Daily reported industry sources as saying that the government wants to decrease the number of rare earth mines nationwide from 123 to less than 10 and to slash the number of processing plants from 73 to 20.

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