China’s Ministry of Industry and Information Technology (MIIT) has announced the first batch of rare earth production quotas for this year which includes 52,500 tons (REO) of rare earth mining quotas and 50,050 tons (REO) of rare earth smelting and separating production quotas, the figure is about half of the last year’s total quota.

China set its total production quotas of rare earths at 105,000 tons (included 87,100 tons of the rock-type light rare earths and 17,900 tons of the ion-absorption-type medium and heavy rare earths) last year. The country’s first batch of rare earth mining quotas was 46,900 tons, while the smelting and separating production quotas was 45,250 tons, the data from the MIIT showed.

China’s first batch of rare earth mining quotas for 2015 increased by 5,600 tons, or about 11.94% compared with the same period of last year; meanwhile the first batch of smelting and separating production quotas for 2015 increased by 4,800, or about 10.6% year on year.

China Northern Rare Earth Group (600111.SH) the country’s largest light rare earth producer said last week that the giant has obtained 29,750 tons (REO) of rare earth mining quotas and 25,960 tons of rare earth smelting and separating production quotas from the MIIT’s first batch of quotas in 2015, representing a 4,750 tons and a 4,690 tons increase from the same period in 2014. The company’s total production quotas accounting for about 56.67% of the country’s total, ranked the first among the six large rare earth groups.

“All of the companies shall not be allowed to produce rare earths without the allocated quotas or exceed quantities of their allocated quotas; local government agencies shall to stringently supervise and check the local companies’ rare earth productions; related illegal rare earth producers shall be seriously punished….,” the MIIT said in a statement.

During the past few years, some of the local governments have largely turned a blind eye to illegal rare earth activities, and also including official’s corruption, which resulted in illegal rare earth mining, production and market circulation were rampant in China.

The MIIT stressed that rare earth quotas have been mainly allocated to six large rare earth groups, the government will continue to cut and even to remove further the quotas for companies outside of these groups.

“Six rare earth groups and related local government agencies shall to submit their production situations and implementation of production quotas on a monthly basis;” the MIIT added in a statement.

Rare earth metals are vital for manufacturing an array of high-tech products, including cell phones, wind turbines, electric car batteries and missiles. In order to ensure its control over the country’s rare earths upstream sector, the ministry has pledged to accelerate the consolidation of the rare earth sector, while completing the integration of all rare earth mines and smelting and separating plants into six large state-owned groups before the end of 2015.

On March 16th, Ganzhou Rare Earth Group announced that Ganzhou Rare Earth Group, Jiangxi Copper Group and Jiangxi Rare Earth and Rare Metals Tungsten Group (JXTC) has jointly set up China South Rare Earth Group in east China’s Jiangxi province, with their stakes at 60 percent, 35 percent and 5 percent, respectively. Ganzhou Rare Earth Group invested 60 million yuan in the new group.

“Rare earth assets of the above three shareholders will be injected into the China South Rare Earth Group. The injection is expected to be completed before the end of the year, which marking the latest move for China to promote consolidation in rare earth industry,” said Huang Guanghui, chairman of the Ganzhou Rare Earth Group.

The establishment of the China South Rare Earth Group will control over the ion-absorption-type medium and heavy rare earths resources in Jiangxi and the country’s second largest light rare earth deposit “Maoniuping REE deposit” in Sichuan Province.