Chinese rare earth firm to form megacompany(2)

If the first step goes well, REHT will eventually team up with major rare earth producers in Gansu, Sichuan and Shandong provinces to form the China North Rare Earth (Group) Hi-Tech Co., the company's general manager Zhang Zhong said in August.

However, the framework agreements will become invalid if formal deals cannot be inked within one year, according to REHT's statement.

Rare earth metals are a group of 17 metals that are vital for the manufacture of high-tech products ranging from smartphones and wind turbines to electric car batteries.

As the world's largest producer of rare earth metals, China now supplies more than 90 percent of the global demand for the metals, although its reserves account for just 23 percent of the world's total.

The process of extracting the metals from the earth is extremely harmful to the environment. The Chinese government has implemented output caps, export quotas, stricter emission standards and higher resource taxes to curb environmental damage.