China and rare earths: monopoly for now

But the soaring RRE prices have led to a wild East "gold rush," with a number of freelance entrepreneurs setting up in Inner Mongolia, a too wild and wooly capitalist endeavor that the audit is designed to curtail.

The record-high RRE prices have also sparked a flurry of exploration activity throughout Central Asia, most notably in Mongolia, where a 2009 estimate by the U.S. Geological Survey concluded that Mongolia has 31million tons of rare earth reserves. Mongolia has some of the world's richest deposits of gold and copper, uranium, coal, fluorspar as well as RREs such as tantalum, niobium, thorium, yttrium and zircon.

Six months ago California-based Green Technology Solutions and Rare Earth Exporters of Mongolia formed a joint venture to exploit Mongolia's RRE potential, sending out their first shipment in April to South Korea via Vladivostok.

So, the RRE race is on.

What is perhaps most interesting is that Western analysts fear covert potential malevolent motives dictating Chinese policy on RRE exports when, in fact, up to now Beijing has behaved as a responsible member of the global economic community.

Of course, soaring RRE prices have nothing to do with Chinese policy.