The official Xinhua news agency cited Zhang Zhong, general manager of the nation's biggest rare earths firm, as saying the new regulation would increase the cost of production and "may raise the price of Chinese rare earth exports".

The report comes amid concerns in Japan and the United States that China, which controls more than 95 percent of the global market in rare earths -- used in high-tech products from iPods to missiles -- is clamping down on exports.

It quoted Yang Wanxi, a government advisor involved in drafting the regulation, as saying the new standards aimed to force firms to upgrade their production techniques.

Yang said experts had also suggested the government consider banning producers whose annual production capacity was less than 8,000 tonnes of mixed rare earth products, the report said.

China has cut rare earth exports by five to 10 percent a year since 2006 as demand and prices soar, in a measure it says is aimed at minimising the harmful environmental effects of mining for the minerals.

A spokesman for China's commerce ministry said last week that Beijing would further cut its export quotas for rare earth metals next year "but not by a very large margin".

But high-tech firms in Japan and the United States say China is deliberately withholding shipments of the minerals -- reportedly over a territorial row with Tokyo and a trade dispute with Washington.

Beijing has repeatedly denied this, and said last month that it would not use its near-global monopoly on the rare earths trade as a "bargaining tool".

earlier related report
China to spend 4.5bn dollars on domestic mineral exploration
Beijing (AFP) Nov 7, 2010 - China will spend 30 billion yuan (4.5 billion dollars) searching for domestic mineral deposits over the next five years in a bid to lessen its reliance on imported products, state media said Sunday.

The government will launch the exploration project in 21 provinces, the official Xinhua news agency quoted Wang Min, vice minister of land and resources, as saying.

Chinese scientists have already discovered more than 900 separate locations with mineral deposits over the past 12 years, the report said.

Five of these could hold five billion tonnes of iron ore, and up to 38.5 million tonnes of copper ore reserves have been discovered in three different areas of China.

"We believe China has great potential for mineral exploration" based on these discoveries, Wang was quoted as saying.

Over the next five years, China should import less than 75 percent of its copper consumption and less than 50 percent of its iron ore consumption, the report quoted Chen Renyi of the China Geological Survey as saying.

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