Reuters reported that Russia will invest USD 1 billion in rare earths production by 2018 in a bid to become less dependent on China, which controls more than 90% of global supply of the elements used in sectors including defence, telecommunications and renewable energy.

The United States, Japan and the European Union have complained to the World Trade Organization about China's efforts to control the sector, saying China is trying to use its stranglehold over supply to drive up prices and gain a competitive advantage.

Rostec and IST group, an investment company belonging to Russian tycoon Mr Alexander Nesis has agreed to invest USD 1 billion in rare earths production by 2018. Rostec aims to cover Russian demand for these raw materials by 2017.

A source in state industrial and defence conglomerate Rostec said that "Mr Vladimir Putin president of Russia and the government have set a task to expand rare earths production as Russia's stocks are almost depleted. Stocks need to be replenished as the main producer, China, has increased prices sharply."

TriArkMining, JV between Rostec and IST has won the right to acquire 82,653 tonnes of monazite concentrate stored in warehouses of state owned Uralmonatsit in the Sverdlovsk region of Russia's Urals. The JV plans to extract about 40,000 tonnes of rare earths from the monazite concentrate stored in the warehouses over the course of 7 or 8 years starting from 2015.

The stock is rich in heavy rare earths, such as dysprosium and terbium, crucial for high power magnets needed by the auto, defence and cleans energy industries. Heavy rare earths are scarcer than cerium and other light rare earths, making them much more valuable.

Russia consumes about 1,500 tonnes of rare earths per year and annual demand is expected to reach 6,000 tonnes by 2020. The company, which has eight firms producing a wide range of defence products, sees rare earths as a strategic raw material. China will cap rare earth production at 93,800 tonnes for 2013 as part of efforts to rein in unlicensed production in the sector.

Mr Sergey Chemezov CEO of Rostec said that "Russia accounts for only 2% of the world's rare earths production. Without new projects, its share in world output would fall below 1.5% in the coming years. Besides that, Russia's high tech industry will be protected against fluctuations in the rare earths global market."