China’s customs administration published preliminary exports data on Saturday, shows that the country’s rare earths exports in July, by volume, climbed to a three-year high on a monthly basis. The soaring exports comes at a time of general anxiety in the Chinese rare earths industry, where Beijing’s failure to control rare earths, have resulted in a collapse in rare earth prices.

Following two consecutive monthly increases (2618 tons in May and 3219 tons in June), in July alone, China’s rare earths exports surged 103.39% year on year to 3,659 tons, hitting the highest level since 2012. However, with an average export price of USD$11,191.03 per ton in July, China’s rare earths exports prices fell about 17.69% from the previous month and dropped about 20.68% from a year earlier.

China totally exported 17,540 tons of rare earth in the first seven months of the year, which was a 10.3% increase compared with the same period in 2014; meanwhile the rare earths exports value fell 7.4 % year over year to USD$ 212.8 million in the first seven months of 2015, according to data released by the China’s customs administration.

The ACREI (The Association of China Rare Earth Industry) spot rare earth price index tumbled nearly 10% again to five-year lows in July, after a failure of many new measures on Beijing’s efforts to prop up Chinese rare earth prices over the past few months.

Currently, the collapse in rare earth prices has been blamed primarily on rampant illegal production. “The illegal mining of rare earth causes oversupply and suppresses the market price.” Xin Guobin, vice Ministry of Industry and Information Technology (MIIT) said at a recent rare earth forum held in Baotou.

“At least 40,000 tons of rare earth elements were illegally mined last year, while legal production stood at 110,000 tons.” said Chen Zhanheng, deputy secretary-general of the ACREI.

Beijing’s taxation authorities last week said the country’s rare earth resource tax revenue raised 1.8 times to RMB 531 million in June alone after the adjusted new tax rate for rare earth resource since May 1. Despite the new resource tax aimed to increase rare earth prices, however, China’s rare earths prices continued their slide deepened in the past three months, pushed lower by the continued outflow of those cheaper rare earths from illegal producers and a cooling Chinese economy, which remains unchanged at present. Though the ACREI in July has called for to prevent the sell-off of rare earths at below cost price, and to stockpiling rare earth again.

The collapse of the China’s rare earth prices is weighing heavily on the country’s six large state-owned rare earth producers. Such as Xiamen Tungsten reported a sharp drop in its net profit in the first half of 2015, the company’s rare earth business has suffered a loss of RMB73.59 million during the period, RMB56.3 million more than the year before; Guangdong Rising Nonferrous is supposed to loss RMB33 million to RMB36 million, down by 572.5% to 615.45% compared with RMB6.9841 million of last year; China Minmetals Rare Earth expected its net profits in the first half to stand at between RMB 0 to 3 million.

Indeed, rare earth demand is now still in “good health” and the growth trend intact. “China’s 2015 rare earth demand for rare earth magnet, catalysts, polishing are expected to increase by about 10%, 7% and 12% respectively;” said Ma Rongzhang, secretary-general of the ACREI last month in a Shanghai’s meeting. “The price of rare earth should be raised after a new rare earth resource tax reform, however, illegal mining rare earth mining and processing are still rampant in the country, as a result, and rare earth prices took another sharp tumble since May.

Based on the increasing demand for rare earths, while Beijing authorities vowed on earlier this year to continue its rectifying and regulating the order of the rare earth market in China, most of the country’s industry investors and analysts saw the bright prospects of rare earth price since the start of 2015. However the recent collapse in rare earth prices shattered that illusion, while is also shaking investors’ confidence in the government’s ability to clean up the illegal mining, production and smuggling in the sector, while stabilizing the market. Since the beginning of 2011, China’s State Council issued a national guideline that promised to realize sustainable and healthy development of the country’s rare earth industry during a five-year period.

Rare earths, often seen as a barometer for the authorities to enhance its pricing power over the strategic resources through controlling the domestic producers, which are widely used in such as high tech, clean energy, defense, and other industries. The poor health of China’s rare earth industry, adding enormous pressure on the government to take further action to stop illegal production and sales of rare earth elements. “The ministry will strengthen supervision and hold local governments accountable if they fail to enforce the crackdown on illegal rare earth mining.” Xin Guobin added.

The Chinese government has tried to adopt wave after wave of boosting measures, including an additional new round of reform plan for its rare earth industry such as to impose “higher” resource tax instead of export tariffs since May in order to shore up the exports price.

China exported about 13,817.9 tons of rare earths in the first half of 2015, down 1.6 percent year on year, with an average export price of USD$12383.79, fell 14.6% from a year earlier.

The Customs data showed that China exported 2106.3 tons of rare earths metals in the first half of 2015, an increase of 25.3% from the same period of last year; the export value was USD$44.693 million, down 10.3% year on year; of which the export to the U.S., 76.9 tons, accounting for 3.65% of the total; to Japan, 1636.8 tons, representing 77.7% of the total; to Holland, 255 tons, occupying 12% of the total.

Meanwhile, the Customs data also showed that China exported 9175.8 tons of rare earths oxide in the first half of 2015, up 8.5% year on year; the export value was USD$114 million, dropped 11.6% from a year earlier; of which the export to the U.S.3874 tons, accounting for 42.2% of the total; to Japan, 2086 tons, representing 22.7% of the total; to Italy, 933 tons, occupying 10.2% of the total; to Holland,773 tons, accounting for 8.4% of the total; to Korea,505 tons, accounting for 5.5% of the total; to Vietnam,303.6 tons, accounting for 3.3% of the total.

Moreover, China exported 2535.8 tons of rare earths salts in the first half of 2015, fell 34% year on year; the export value was USD$12.23 million, an decrease of 45.7% from the same period of last year; of which the export to the U.S. 330 tons, accounting for13% of the total; to Japan, 1594 tons, representing 62.8% of the total; to Germany and Italy, 121 tons and 162 tons, occupying 4.8% and 6.4% of the total, respectively.

China totally imported 5541.5 tons of rare earth in the first half of 2015. Of which China’s rare earth oxides and compounds imported 626 tons (included Malaysia 351.6 tons, Myanmar 98 tons), rose 51% year on year; the import value was USD$ 13.298 million, fell 53.1% year on year; While China’s rare earth metal imported 493.5 tons(included the U.S.352.8 tons, France 98.9 tons) an increase of 0.7% year on year, valued at USD$2.968 million, an decrease of 24.4% from a year earlier; China’s rare earth salts imported 4422 tons (included Malaysia 2252 tons, the U.S. 1201 tons and Vietnam 574 tons ), far more than last year’s 193.8 tons, valued at USD$10.132 million, far more than last year’s USD$2.4 million.