Steel Guru reports Baotou Steel Rare Earth (Group) Hi Tech Co, the world’s largest rare earth producer, will consolidate 35 local miners this month and further unify the distribution and processing of the 17 elements. The Inner Mongolia autonomous region, the site of 97% of China’s reserves, has drafted a plan to concentrate all resources under Baotou.

The move follows the announcement last week that the state-owned firm will set up the country’s first rare earth products exchange to further regulate the market. China accounts for upwards of 95% of global supply. To combat China’s domination of the market the US recently declared rare earth to be a strategic resource for the country.

Steel Guru reports:

Much larger reserves of light rare earth metals have been discovered in the Inner Mongolia autonomous region, while heavy rare earths are mostly scattered in South China and are more expensive. The Ministry of Land and Resources said that 15 southern Chinese cities with abundant heavy rare earth resources have signed agreements to cooperate in regulatory enforcement.

On Wednesday, MINING.com argued that rare earths stocks are a magnet for investors again:

This is what happens when you corner a market the way China has done with rare earth elements: Statistics collected in Hong Kong show exports of rare earth metals have shrunk by half over the past year. Over the same period, the value of these exports jumped 10-fold.

It’s hard to argue with these kinds of numbers. After the stocks prices of the few big players pulled back from recent highs investors saw it not as evidence of sobriety returning to the market, but simply as a buying opportunity.

MINING.com spoke to Elissa Resources in May:

On Friday, Vancouver-based Elissa Resources had to declare that no material changes were taking effect at the company at the request of the Investment Industry Regulatory of Canada after its shares on the TSX-Venture exchange more than doubled during the week. The company plans to start drilling at its Thor property across the border in Nevada from Molycorp’s Mountain Pass this year.

source http://www.mining.com/2011/06/05/china-tightens-grip-on-rare-earth-supply-as-baotou-gobbles-up-35-small-miners/