On its website on Tuesday, the Chinese Ministry of Industry and Information Technology said that China will hold a large-scale audit of domestic rare earth metal producers to check for production quota breaches.

The ministry said in a statement that the audit, which will be held from August 1 to December 31 this year, which  aims to expose rare earth metals producers breaching existing regulations and continuing illegal trade in rare earth metals.

Chinese companies exceeding rare earth metals production quotas or using outdated and environmentally hazardous technologies will be obliged to halt their operations or face the revocation of their license, the ministry said.

In the wake of their quick depletion and over environmental concerns, the Chinese government has repeatedly stated about the need to regulate rare earth metal production.

China, which accounts for about a third of the world’s rare earth metals reserves and over 90 percent of the market of rare earth metals, an important raw material for high-tech electronics, suddenly cut export quotas by 72 percent in the second half of 2010 to 7,976 tons and then increased them to 14,446 tons in the first half of 2011 and to 15,738 tons in the second half of 2011.

The increase in world demand for rare earth metals has sharply pushed up prices on global markets. In the first half of 2011 the rare earth metal product prices jumped 200 percent, with the prices of some items soaring 500-1,900 percent, according to China Nonferrous Metals Industry Association (CNMIA). China’s exports in the first half of 2011 grew 830 percent to $1.54 billion.