British media said data provided by Adamas Business Company showed that China would restrict the production of domestic rare earth minerals in the second half of this year, which is likely to curb international exports and cause the price of rare earth to soar, forcing manufacturers to look for alternative supplies worldwide.

        In the second half of 2018, China cut its rare earth separation and smelting quota by 36%, limiting rare earth production to 45,000 tons, the lowest level in more than five years, aiming to provide enough supply for domestic buyers and better control the market, according to Adamas, which closely tracks the rare earth industry, Reuters reported on October 24.

        Ryan Castillo, of Adamas Business, said that although China might meet its own needs before exporting, increasing exports would require China to consume already low stocks of neodymium, praseodymium and dysprosium used in electric vehicle engines. In the next 12 months, the price of neodymium oxide, a key rare earth ore, may rise by 10% to 50%, and will double in the next five years as demand exceeds supply.

        China is currently the world's largest producer and consumer of rare earths, including 17 elements that can be used to make electric vehicles and consumer electronics, the report said. China usually exports about 80% of global demand for rare earths, about 156,000 tons a year. Nevertheless, exports fluctuate sharply every month. According to the data, in September, for example, rare earth exports surged by 15% from August, although they fell earlier this year.

        China's export restraint and market dominance frightened manufacturers, including Japanese electronics maker Panasonic, which said it was looking for new supply channels, the report said.

        In a statement to Reuters, Panasonic said: "We have been working to diversify our purchasing channels, build partnerships with suppliers and reduce the use of rare earths."

        According to the report, Australia's Lenas Mining Company is the only large enterprise that produces rare earths outside China through its processing plant in Malaysia. But last month, a Malaysian politician said the plant should be closed, causing the company's share price to fall and further upsetting the rare earth market.

The report points out that there is little research on rare earth substitutes and manufacturers can only rely on those special minerals, while demand for electric car batteries and other products using this material is soaring. For example, an ordinary Toyota Prius uses 25 kilograms of rare earth, while an ordinary combustion engine car uses 1 kilogram of rare earth.