CHINA'S regulation of its rare-earth minerals industry protects the environment, prevents over exploitation of the resource and promotes the development of new energy industries across the globe, experts say.

Rare earths have become increasingly important in the manufacturing of new energy products like electric-car batteries, wind turbines and other sophisticated products including flat-screen monitors, missiles and aerospace alloys.

The exhaustion of China's rare earths would be a major blow to the world's green energy industry, so China must regulate to curb excessive and disorderly mining of the non-renewable resource, the latest edition of the Xinhua news agency's finance magazine - Economy & Nation Weekly - quoted Lin Donglu, secretary general of the Chinese Society of Rare Earths, as saying yesterday.

Steps China takes to regulate its rare earth industry include reducing export quotas, cracking down on illegal mining and smuggling, halting the issue of mining licenses and imposing production caps.

The time is right to form an international competition mechanism for the rare earth industry to ensure sustainable development of new energy technologies, Lin said, noting that China's rare earth reserves accounted for one third of the world's total in 2009.

However, China produced 120,000 tonnes of rare earths last year, 97 percent of the world's total, according to a report by Marc Humphries, an energy policy analyst at the United States Congressional Research Service.

China announced guidelines earlier this month to encourage mergers and acquisitions in the rare earth sector to enhance industry consolidation.