China tightens hold on rare earths -

The Chinese government has indicated that it will continue to tighten its grip on its supply of rare earth materials, as Japan seeks a closer relationship with Australia for the coveted minerals.

It was announced that an area 2,500 square kilometres of the Jiangxi province in southern China, containing around 760,000 tonnes of the deposits, will be subject to more scrutiny and stringent regulatory checks.

The “state planning” zone will aim to continue to cut production of the much sought after materials, as China, which provides the vast majority of the world’s supply at present, aims to manage resources more effectively.

"China's rare earth reserves only account for a third in the world but China supplies more than 90 percent of rare earths globally -- that's obviously not sustainable," a ministry official was quoted as saying.

This means that the rest of the world is having to panic somewhat - with such an unreliable supply from the near monopoly holder.

China produces an estimated 97 percent of the global supply, but cut its export quota in 2010 by 40 percent, with a 35 percent cut planned for this year.

China, according to Reuters, believes that such quota cuts and increased control over production will avoid exploitation of its resources too quickly, while reducing pollution that comes as a result of the mining process.

While this is no doubt a sound argument, China has been able to use the rare earths as a political tool, choking supply when it sees fit.

This has led to Japan desperately seeking to establish trade relations with Australia in order to ensure a reliable supply in future, following a spat with China leading to the superpower withholding the valuable resources.

Following a territorial dispute with China, Japanese Trade Minister Banri Kaieda made clear in talks with his Australian counterpart that the country needs a reliable long term supplier.

"From my side, I have requested stable supplies of rare earths," Kaieda told reporters, according to the SMH.

Australian Trade Minister Craig Emerson indicated that such a relationship was likely, saying to reporters: "Our reputation as a stable and reliable supplier of minerals extends to rare earths."

China has denied any claims that the cutting of exports to China has anything to do with a dispute over islands in the East China Sea, once again pointing to conservation.

While trade has begun since December, Japan is concerned that a similar incident may happen again, with rare earths vital to the production needs of a country that relies on technology.

Australia has an estimated 1.6 million tonnes of the materials, with China accounting for 55 million tonnes.

Russia and the US have 19 million and 13 million tonnes respectively.