Rare earth prices in China have surged about 10 percent in the past two weeks, helped by a crackdown on illegal mining, Wednesday's Shanghai Securities Journal reported.
Rare earth metals are a group of 17 elements that are widely used in high-tech products. According to the report, prices of praseodymium-neodymium oxide stood at around 270,000 yuan (45,000 U.S. dollars) per tonne on June 25, about 20,000 yuan higher than the price recorded two weeks ago.
Prices of dysprosium oxide and terbium oxide were 1.35 million yuan and 2.6 million yuan per tonne respectively on June 25, each up about 200,000 yuan compared with a fortnight ago.
Rare earth prices reached their peak in July 2011 in China before it slumped over weak market demand and overcapacity in production.
According to the report, local police in east China's Jiangxi Province, the country's major rare earth production base, have recently stepped up inspections on the sector.
In Xunwu County alone, local authorities cracked down on three illegal mines and have arrested four suspects since June 8.
The campaign is part of nationwide efforts to clean up the sector. The Ministry of Industry and Information Technology said tougher measures will be launched this year to curb illegal mining and processing.
Gao Yuxin, an analyst with ruidow.com, a Chinese website specializing in providing metal information, said the clampdown has had an effect as prices of rare earth metals in the sector's mid-stream segment started to go up, indicating less supplies.
Gao said demand for rare earth metals is warming up at the same time, with large rare earth permanent magnet plants now running at 70 to 80 percent of their capacity, while small ones are operating at 40 to 50 percent of their capacity.
Rare earth permanent magnet materials, which have rare earth elements in their composition, are widely used in electrical motors, medical treatment and spaceflight.
In the second quarter last year, the capacity utilization rate in these plants was at about 30 percent, said Gao.