China has earmarked a special fund from a central government budget to develop and upgrade its rare earth industry.
The fund will be used to help local governments crack down on illegal exploration and mining, and help rare earth companies upgrade technology to become more environmentally friendly, the Ministry of Finance said in a statement yesterday. The fund will also help in the research and development of high-tech applications.
Local governments which have created a system to supervise rare earth exploration and development may get a one-off award equivalent to up to 20 percent of the system's total costs under the fund, the statement said.
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 (US$8 million) for a single project, it said.
Rare earth mining and refining firms verified by state environmental authorities may also get the award for every ton of their output under the fund, the ministry said.
The statement came after many rare earth companies reported profit plunges and announced production halts to buoy prices.
The sector experienced a roller coaster ride last year, with the prices of some rare earth products soaring in June last year to a level six times higher than earlier, partly as a result of the government measures to introduce production caps, export quotas and stricter environmental rules after rampant exploration and mining had taken its toll on the nation's environment and deposits.
However, prices of the minerals have tumbled from their dizzying heights since a speculative bubble burst last year.
China has about 23 percent of the world's rare earth reserves but supplies more than 90 percent of global demand. Rare earths are a group of metallic elements vital in making an array of high-tech products, including missiles and hybrid cars.
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