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A Chinese professor has called for a national reserve system to be established for China's rare earth elements to better safeguard the country's precious resources.

China holds the world's largest rare earth deposits and boasts advanced separation and extraction technologies; yet the country does not hold equally dominant rights to set its price in the international market.

The People's Daily quotes Xu Guangxian, a professor with the Chinese Academy of Sciences, as saying that the phenomenon was mainly attributed to smuggling, hoarding by foreign countries and the chaotic situation in domestic exploitation rights.

Chinese scientists did not have the awareness to use their property rights on the separation technology to limit the exploitation of rare earth elements by private miners, whose rush to compete in the market leads to oversupply and drives prices down.

According to the People's Daily, from 1995 to 2005, close to 10 billion US dollars worth of losses were incurred on the part of Chinese rare earth enterprises as a result of low price exports.

Another problem is the huge amount of exploitation coupled with a low utilization rate. Altogether 15 million tons of rare earth was excavated from the Bayan Obo rare earth ore deposit of Inner Mongolia from 1958 to 2008; however the utilization rate was only 10 percent and the rate was zero for the 800,000 tons of thorium exploited.

The article predicts a major deposit at Bayan Obo will run dry in 25 years if left unchecked at the 2008 excavation rate.

And about 60 percent of the Ion-type rare earth ore in southern China had been exploited by 2007, with the utilization rate standing at only 40 percent, threatening to exhaust the resources in 10 years.

Meanwhile, China's domestic demand for the rare metals in aviation, wind farms and electronics sectors continues to increase and now takes up more than half of the country's annual output. In the foreseeable future, China may not even be able to realize self-sufficiency, which will be extremely detrimental to the country's high-tech development.

Lu Zhiqiang, Deputy Director of the Development Research Center of the State Council, says the impact of environmental degradation from the mining process also speaks loudly for a reserve mechanism to restrict rare earth exploitation and export. Crude mining methods have taken a heavy toll on the mining areas' environment, not to mention hazards from the tailings, dams and radiation.

Measures have already been taken by China's central government to regulate the sector. The Ministry of Land and Resources issued an order on June 26, 2006 to set the upper limit of annual production of rare earth elements at 740,000 tons. So far, the number of the country's mining enterprises has been reduced to 20 from more than 100.