It was announced on Wednesday that China will earmark special funding from its central budget to support a restructuring of its rare earths industry.

The money will be used to fund local government crackdowns on illegal mining, upgrades to existing facilities for higher environmental standards, research and development and high-tech applications.

Rare-earth mines that have passed the country's environmental checks will be given an allowance of 1,000 yuan ($158.73) per ton of their production capacity of rare earth oxide. The allowance for smelting companies will stand at 1,500 yuan per ton of their production capacity, according to an official statement.

Financial support to authorized high-tech application projects will be up to 20 percent of their annual investment but the total amount will not exceed 50 million yuan for a single project, it said.

The statement came after many rare earths companies, including Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co., China's largest rare earth producer, reported profit plunges and announced production halts to buoy prices.

The sector experienced a roller coaster ride in 2011, with the prices of some rare earth products soaring in June to a level six times higher than earlier in the year, partly as a result of the government strengthening controls on toxic mining and processing. However, prices of the 17 minerals widely used in high-tech commodities such as smart phones and hybrid car batteries have tumbled from their dizzying heights since a speculative bubble burst last year. The price drop has also been attributed to softening demand amid sluggish global growth and new rare earths production coming online.

Xinhua