The move is aimed at protecting the valuable mineral resource in China, which boasts 80 percent of the world's total reserves.

Liu Zhong, an official with the Ministry of Land and Resources, said the move is also expected to avoid a damaging price war between the country's rare earth companies.

Since the international market of rare earth is saturated, Liu said, China should not maintain its rare earth output.

Boasting lots of uses in such areas as the chemical industry, electronics and communications, rare earth is much sought after around the world. Last year China ranked first in the world both in terms of production and export of the mineral.

Liu said the suspension is linked to the planned re-organization of the country's rare earth industry. According to the plan, two giant rare earth companies will be established to integrate the country's many scattered, low-efficiency small mining and processing operations.

The newspaper said Beijing-based Aluminum Corporation of China LTD and the Baotou Steel & Rare Earth Enterprises Group, located in north China's Inner Mogolia, will be the front-runner contenders for the re-organization.

Only those mining firms which have been proven to be "competitive, influential and promising" will be incorporated into the two giants. The newspaper said these firms will be granted the bulk of the country's rare earth export quota in the future.

(People's Daily March 31, 2003)