The central government plans to set up a large-scale rare earths conglomerate in Ganzhou, Jiangxi province, in a step toward consolidating the country's ill-regulated industry in southern China.

The enterprise will be set up in accordance with China's industrial layout for the rare earths sector and will consider the interests of local people, the State Council said in a statement on its website on Monday.

"The country will have priority policies for the city in terms of production quotas for rare earths and tungsten products ... and support Ganzhou to build up a strategic resources inventory base for ion-type rare earths ...." the State Council noted.

The move came only a few days after the Ministry of Industry and Information Technology announced that mining valuable minerals without its permission was banned.

Illegal exploration

China, which produces about 95 percent of the world's rare earths metals, has relentlessly cracked down on rampant illegal exploration, particularly in southern China, to protect the minerals from being over-exploited.

Ganzhou, which owns about 40 percent of the country's most valuable ion-type rare earths minerals, has spearheaded regulation against illegal exploration.

The central government issued a guideline in May last year to curb the irrational regulation. It aims to let the industry's top three conglomerates in southern China control more than 80 percent of the region's resources within one to two years.

The valuable minerals are widely used for high-tech products including iPhones and missiles.

"So far, it's very difficult to consolidate the region that is filled with privately held companies, especially when selling the metals remains very profitable," said Chen Zhanheng, director of the research department of China Rare Earths Institute.

It's likely that China may consider equity swaps among big companies after provincial-level consolidations are completed to finally form several conglomerates in the region, Chen said.

"But it will take much longer than planned."

Similar policies in other provinces rich in rare earths resources, including Guangdong and Fujian, will follow, Chen said.

zhouyan@chinadaily.com.cn