A production halt at China’s largest rare earth mines to boost pricing and demand has drawn government concern over resource security and the environment in the West – while analysts say the move is mutually beneficial.

Inner Mongolia Baotou Steel Rare-Earth postponed production last month in an effort to “stabilise the market and balance supply and demand,” according to an official statement from the company.

"China has had a coordinated rare earth strategy for many years," according to a press release from Quantum Rare Earth Developments Corp CEO Peter Dickie, "The U.S. must respond or risk becoming so far behind the curve that it's impossible to catch up."

“China, is actively manipulating both the availability and the prices of their supply.  That’s a big problem.” said U.S. Sen. Lisa Murkowski, R-Alaska in a press release, “That arrangement is distinctly to China’s advantage, not ours, and it has significant consequences for our competitiveness and security.”

But China’s rare metal strategy goes deeper than most media assume, according to a report published recently by Technology Metals Research (TMR) LLC, an independent publication covering rare commodities.

“The Chinese Ministry of Land and Resources allocates rare-earth production quotas to each of [its] provinces” said the report, “and the output figures include estimated unregulated output – that might be subsequently exported illegally out of China”.

Prices for rare earths have dropped 20 percent in the three months prior to the halt.

“What China's rare earth policies have done, above all else, is drive up prices, said David Stanway, a correspondent specializing in rare earth metals for Reuters in Beijing, “and when prices are high, you will find other projects coming on stream, even those where production costs were previously considered too high”.

 “[China] is happy for other countries to "share the burden" of production, which allows it to give priority of supply to the domestic market”, noted Stanway.

There had been little incentive to mine outside of China [prior to the production halt], according to Donald Ranta, CEO of Colorado-based Rare Element Resources, supporting a proposed US stockpile of rare earths.

Rare earths, such as Dysprosium and Neodymium, are a unique group of chemical elements that exhibit a range of special electronic, magnetic, optical and catalytic properties - often used in complex engineering operations and sophisticated electronics, according to TMR.

 “Minerals make it possible for us to innovate and invent – and in the process they shape both our standard of living and our ability to prosper.” said Murkowski, R-Alaska.

According to a resource assessment by Aurora Geosciences, Bokan Mountain, located in Alaska, may contain rare earth mineral deposits worth up to USD$6.5 billion.

“Too often, we forget that a stable and affordable supply of minerals is critical to our nation’s ability to compete in a rapidly changing world,” said Murkowski, “we need to make sure our regulations don’t restrict domestic producers or force them to operate elsewhere”.

Under the Clean Water Act, the Environmental Protection Agency (EPA) has produced new rules for greenhouse gas emissions; withdrawing federal land slated for uranium mining in Arizona, retroactively withdrawing mining permits in West Virgina and undertaking a ‘Watershed Assessment’ of Alaska’s Bristol Bay region.

Meanwhile, environmental concerns may need not apply if new sources of rare earth metals are not by-products of base metal production, which are energy-intensive to refine.

New sources of rare earths will be found in “primary” deposits, and should not have policies applying to other rare metals with high-tech applications, according to Gareth Hatch PhD, founder of TMR.

“There is no question that mining has an environmental impact; it involves digging holes in the ground.” said Murkowsky, “But we must also acknowledge the national interests served by reducing our reliance on foreign, critical mineral supplies, and understand that these projects are pursued in more modern and responsible ways here at home.”

There’s been skepticism that China will be able to control its production levels this year, but a nationwide government crackdown on illegal activities has secured industry confidence, noted Stanway.

Last year, China reduced its export quota by more than 37%, according to a 2011 report by the US Geological Survey.

The United States has not yet included rare earths in its’ National Defense Stockpile, according to the US Department of National Defense.

Molycorp, the largest supplier of rare earths outside of China, will open a California processing plant months ahead of schedule, according to Reuters.