China bought 10,000 metric tons of rare earths in one week earlier this month, said two people familiar with the matter, as the country continues to stockpile the metals used in batteries and magnets amid international pressure to ease export quotas.

The State Reserve Bureau paid above-market prices, according to the sources, who asked not to be identified because they weren't authorized to speak publicly about the purchases.

China's move may be an effort to reverse a decline, as the price of at least one kind of rare earth tumbled 76 percent from its 2011 high, according to Peng Bo, an analyst at China Merchants Securities Co.

Prices of praseodymium-neodymium oxide tumbled 76 percent to 307,500 yuan ($49,597) a ton after reaching a record in mid-2011, according to data from the Shanghai Steelhome Information Technology Co.

In March, the World Trade Organization sided with the United States, Japan and Europe in ruling that China had not adequately justified imposing export duties and quotas on rare earths and other resources.

"China is facing imminent pressure to abolish the export quota, so stockpiling is part of the policy reaction to help prop up prices and keep more of the resources at home for future use," Peng said by phone from Shenzhen on Aug 5.

Two calls to the National Development and Reform Commission, which oversees the State Reserve Bureau, went unanswered on Aug 5.

The country cut mining permits and imposed production and export quotas in 2007 to reduce pollution and conserve supplies. China also has encouraged consolidation among rare-earth miners and promoted domestic trading.

Rare earths are a group of 17 chemically similar elements used to make products from wind turbines to magnets for cars and weapons.

In June, China set mining quotas for heavy rare earths and tungsten at the same levels as last year, while raising the quota on more abundant light rare earths.

This year, China may stockpile more medium-to-heavy rare earths, such as terbium, lutetium and yttrium, which are used in applications ranging from lasers to nuclear reactors, said China Merchants' Peng.

China's own rudimentary industrial sector is not yet able to make full use of the country's output, Peng said. Thus, the government may hoard these elements for future use, she said.

"The mining and refining industry, hampered by a drastic slump in prices, sees the purchase as a life-saver," said Chen Huan, an analyst at Beijing Antaike Information Development Co. "Prices the government agreed to pay are much higher than the prevailing market price."

The move by the government is mainly to build a strategic stockpile in anticipation of rising demand from the domestic industry in the future, Chen said.

(China Daily European Weekly 08/08/2014 page23)