BEIJING China, the world's largest producer and consumer of rare earths, may start building an 18,000-tonne strategic stockpile of the elements in September, the Economic Information Daily newspaper said on Thursday.
Though it has just 23 percent of global reserves, China accounts for more than 90 percent of the world's supplies of rare earths. It has trimmed its export quotas in recent years, angering trade partners who say the curbs are unfair.
"Given the fluctuation of the market and falling rare earths prices, the government should be prudent on the grade, volume and timing of rare earths reserves," the paper, which is run by state news agency Xinhua, quoted an unnamed source as saying.
China has abundant supplies of light rare earths in northern regions including Inner Mongolia, but a much smaller amount of the more expensive medium and heavy types used to make complex products like turbines and computer chips.
The newspaper cited industry sources as saying that the government should preserve the more scarce medium and heavy rare earths rather than light grades.
Beijing has accelerated its campaign to stop illegal private production, and has encouraged leading producers to build their own stockpiles of the elements.
After two years of rapid increases, a fall in rare earths prices in the past year has caused huge losses in the sector and undermined China's plans to build stockpiles, the newspaper cited another source as saying.
On Wednesday, China released a new round of rare earths export quotas, taking its 2012 export quota to 30,996 tons, up slightly on last year despite a crackdown on small producers.
The country exported 16,900 tons of rare earths in 2011, down 58 percent from the previous year.
(Reporting by Judy Hua and David Stanway; Editing by Daniel Magnowski)