China will make more efforts to consolidate the rare earth industry and promote mergers led by 6 major producers, an official told Xinhua on Thursday.

Following restructuring efforts in recent years, the rare earth industry now has six leaders, including the Inner Mongolia Baotou Iron & Steel (Group) Co Ltd, China Minmetals Corporation and the Aluminum Corporation of China, said Su Bo, vice-minister of industry and information technology.

The six companies will separately carry out mergers in the industry to create large rare earth producers, Su said.

China is the world's largest rare earth producer and exporter, but the industry is beset by a slew of problems, such as illegal mining, smuggling and a lack of competitiveness due to weak research and development capabilities. Excessive exploration has also caused environmental damage.

The State Council, China's cabinet, issued a guideline in 2011 to improve the management of the industry, which included a crackdown on illegal mining and encouraging mergers.

Su said the government will step up legislation to regulate the industry and urged local governments to provide assistance for work related to mergers, such as the placement of workers, debt settlement and compensation.