BEIJING - China announced on Wednesday that it will earmark special fund from its central budget to support the restructure of its rare earths industry.

The money will be used to fund local governments' crackdown on illegal mining, enterprises' facility upgrading for higher environmental standards, research and development and high-tech applications, the Ministry of Finance said.

Rare-earth miners that have passed the country's environmental checks will be given an allowance of 1,000 yuan (158.73) per tonne of their production capacity in terms of rare earths oxide. The allowance for smelting companies will be 1,500 yuan per ton of their production capacity, according to a statement posted on the ministry's website.

Financial support to authorized high-tech application projects will be up to 20 percent of their annual investment and the total amount will not exceed 50 million yuan for a single project, it said.

The statement came after many rare earths companies, including Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co, China's largest rare earths producer, reported profit plunges and announced production halts to buoy prices.

The sector experienced a roller coaster ride in 2011, with the prices of some rare earths products soaring in June to a level six times higher than earlier in the year, partly as a result of the government strengthening controls on toxic mining and processing by consolidating the industry.

However, prices of the 17 minerals widely used in high-tech commodities such as smartphones and hybrid car batteries have tumbled from their dizzying heights since a speculative bubble burst last year.

The price drop has also been attributed to softening demand amid sluggish global growth and new rare earths production coming online.