The nation's rare-earth producers are set to form an industry association by May, in an effort to get the minerals' exploitation and production under scrutiny and to minimize their environmental impact, the project's leader revealed Monday.

"Preparations for establishing the organization have been completed, and the relevant documents have been submitted to the Ministry of Industry and Information Technology (MIIT) and the Ministry of Civil Affairs for approval," Wang Caifeng, a former MIIT official, who is now overseeing the project, told the Global Times.

"It is likely to begin operation in May. It aims to help strengthen regulation of the industry players and ensure that government policies are properly implemented," she said, adding that the association will consist of more than 90 domestic rare-earth producers.

China has made robust progress in terms of the production, application and consumption of rare earths in recent years, but problems including decentralized operations, over-exploitation and unfair competition still remain. Thus, this association aims to address and resolve these problems, Wang added.

As the world's largest rare-earth producer and exporter, China provides 97 percent of the global rare-earth demand, although its reserves account for only one-third of the world's total reserves.

The US had 13 percent of the world's rare earths but was not mining them due to environmental concerns, according to "Rare Earth Elements: The Global Supply Chain," a report submitted last month to the US Congress by Mark Humphries, an energy policy analyst.

Rare-earth minerals are used as components in mobile phones, batteries for hybrid cars and in the aerospace industry, among other high-technology products.

According to traditional production processes, the production of just one ton of rare earths will destroy 200 square meters of land, strip away 300 square meters of top soil and directly lead to catastrophic soil erosion, the China Business Times reported.

With small rare-earth manufacturers scattered across the country, China has no regulatory body governing their management.

For a long time, the exploitation and exports of rare earth have been loosely regulated, with the resources being sold at cheap prices internationally, bringing about a dramatic drop in China's reserves and to a deterioration of the environment.