China's long-awaited rare earth industry association is due to be established early next month and will cover the majority of companies in the industry chain, in the latest move to consolidate the ill-regulated sector.

The association, which will have more than 100 members, will be formally launched in Beijing on April 8, according to people with direct knowledge of the situation, who declined to be named.

Several rare earth exploring and processing companies confirmed they have received notification to attend the launch ceremony in April, without elaborating.

There has been widespread market speculation for years that the government would set up an official organization to strengthen ties among the industry's players.

Such rumors have been escalating in recent years as rare earth prices have experienced heavy volatility amid rampant illegal exploration.

For example, neodymium oxide, one of the major rare earth oxides, rose by as much as 82.7 percent since early 2011 due to speculation, but its price has plunged about 70 percent within the past six months, said Chi Weishan, a researcher at Shanghai Metals Market.

The association will be supervised by the Ministry of Industry and Information Technology, according to a report in the National Business Daily, citing anonymous sources.

The major functions of the organization will include providing production guidelines, market research and channels of communication between companies and the government, the newspaper said, adding that the association will play a role in influencing rare earth import and export quotas.

China, which accounts for about 97 percent of the world's output of the strategically important minerals, faces pressure from the European Union, the United States, and Japan, which filed a joint cased to the Word Trade Organization against China over its alleged unfair controls on rare earth exports.

Minister of Industry and Information Technology Miao Wei was quoted by Xinhua News Agency as saying that China's policy on rare earths exports does not target any specific country.

China holds about 36 percent of the world's total reserves of the minerals and has paid the environmental cost for its largely unregulated and heavy exploration of rare earths.

Facing possible trade disputes between China and Western countries on rare earths, one of the industry association's pressing tasks should be to proactively deal with the disputes and guarantee the interests of the Chinese, said Yuan Zhibin, an analyst at the Beijing-based CIC Industry Research Center.

Other responsibilities will include strengthening communications among companies, and also encouraging mergers and acquisitions in the industry, he added.

The State Council issued a document in May to develop China's rare earth industry, in which it said the government aims to consolidate 80 percent of the heavy rare earth mining assets in southern China in the three biggest companies in the next one to two years.

zhouyan@chinadaily.com.cn

(China Daily 03/31/2012 page9)