The country's rare earth producers say they have increased their efforts at upgrading product ranges and shifting toward downstream businesses due to a glut in supplies of the raw materials, including those produced by illegal mining.

"We have been putting more effort into innovation and technology in downstream products," said Gan Mei, director of public affairs for Tianhe (Baotou) Advanced Tech Magnet Co.

"But many rare earth miners have been forced to shutdown production in the past three to five years because of ongoing price wars and excessive production."