Exports of rare earth metals (REM) from China stood at only 11,000 tonnes from January to September, accounting for only 40 per cent of the overall export quota for 2011. Latest figures likewise showed a 65 per cent fall year-on-year.

Jia Yinsong, director in charge of rare earths at the Ministry of Industry and Information Technology (MIIT), said falling foreign demand, not domestic export caps, was the culprit for the dismal figures, according to the China News Service.

Two years ago, China started slashing export quotas as it closed some of its rare earth processors due to environmental concerns. The move created panic in the global market as China controls 95 per cent of the world's REM supply. Global consumers have complained China's REM policies not only unfairly shrunk global supplies but also drove prices upward.

Mr Jia, however, justified the fourfold surge in prices of REM since these have been priced below par in the last previous years.

For this year, China set a production ceiling of 93,000 tonnes. Its biggest rare earth minerals producer, Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Co. was given a production quota of 50,000 tonnes for 2011, while 5,000 tonnes was assigned to rival China Minmetals Corp.

Of the total figure, China imposed an export quota of only 30,184 tonnes compared to 30,258 tonnes in 2010, triggering the impression the world's second-largest economy is out to manipulate production and prices of REM in the world market, paving the way for non-Chinese miners, such as American MolyCorp and Australia's Lynas, to scour the earth for locations of the precious REM.

China's manipulation of the current REM global supply, according to analysts, meant to encourage non-Chinese miners and foreign consumers to relocate their businesses to China.

China had been saying environmental concerns brought by the mining hazards of the REM led federal government to enforce strict regulations on its REM sector. Since August, it has been monitoring the sector and closing down illegal producers and traders, a move seen to give its REM sector to a handful, "favored" enterprises.

Early this quarter, China announced it will be introducing specialised invoices for designated rare earth producers to eliminate unlicensed production and smuggling of its REM.

REM, made up of 17 elements, are widely used in manufacturing of batteries of hybrid vehicles, computers, digital cameras, televisions, smartphones, in long-lasting light bulbs and serving as critical magnets in guided missiles.