China is set to launch on April 8 a rare earths industry association in a bid to curb the rampant domestic illegal mining of the precious metal commodity as well as regulate its rare earths players.

The rare earths industry association will have more than 100 members, which basically covers the majority of rare earths players in China, The China Post reported.

To be supervised by the Ministry of Industry and Information Technology (MIIT), China's very own rare earths industry association will provide members production guidelines and market research, as well as act as conduit of communication between companies and the government.

According to the National Business Daily, the rare earths industry association will play a vital role in influencing rare earth import and export quotas.

The eventual launch of the rare earths industry association is the culmination of widespread market speculation that China will come up with an organisation that will monitor and regulate the activities of the sector, most especially the rampant illegal exploration.

Just last week, the MIIT expressed plans of merging Beijing's rare earths mining players into two or three giant companies. But a professor from Jiangxi Polytechnic College, Professor Wu Ding, opposed, claiming the move could be detrimental to China's economic growth in the long term.

"I am not too supportive of consolidating into a few large companies. State-owned monopolies are another obstacle that hinders China's economic development. The amount of space state enterprises squeeze smaller enterprises into is too small. You can see this in oil, electricity, and so on," Professor Wu's said over New Tang Dynasty Television. In Inner Mongolia, where most of China's rare earths are found, 14 rare earth mining companies have been consolidated under Baotou Steel Rare-Earth Hi-Tech Company, Professor Wu added.

China is the world's predominant supplier of rare earths, holding about 36 per cent of the world's total reserves of the minerals. But because of its largely unregulated and heavy exploration of rare earths that led to illegal mining and smuggling, on September 2009, China announced slashing its export quota to 35,000 tonnes per year in 2010 to 2015.

On October 2010, China announced further reducing 2011 rare earths exports quotas by 30 per cent. By end 2010, Beijing said the first round of export quotas in 2011 for rare earths would be 14,446 tonnes, 35 per cent low from the previous first round of quotas in 2010. Come July 2011, China further slashed export quotas for the second half of the year with total allocation at 30,184 tonnes.

In September 2011 China announced suspending the production of three of its eight major rare earth mines, responsible for almost 40 per cent of China's total rare earth production.

China currently faces pressure from the European Union, the United States, and Japan, after the three global economic leaders lodged a joint case before the World Trade Organization against its alleged unfair rare earth exports regulations.