TOUGH new emission limits on Chinese miners producing rare earths will force a reshuffle in the industry, according to experts and insiders.

The rules, released by the Ministry of Environment Protection, will take effect on October 1.

"The rules will drive the small and medium rare earth enterprises out of the industry or into mergers with big players and thus promote industry consolidation," said Lin Donglu, secretary general of the Chinese Society of Rare Earths.

The rules, for example, set an emission cap for ammonia nitrogen content at 25 milligrams per liter of water for existing rare earths companies during the two years from January 1, 2012, a sharp drop from the current level, which ranges from 300 to 5,000 mg per liter of water.

The emission level for ammonia nitrogen content will be further reduced to 15 mg per liter for all companies in the industry from January 1, 2014.

Liang Xingfang, deputy general manager of Baotou Rewin Rare Earth Metal Materials Co Ltd said the new standards were strict, "especially ammonia nitrogen emissions, which places big pressure on firms."

Liang said it was more difficult for firms to deal with ammonia nitrogen content in water emissions than in gas and sludge emissions.

"The rare earths enterprises which use backward hydrometallurgy and baking technology will have to invest hugely to upgrade their technology," Liang said.

The new standards will help the sustainable development of the rare earths industry in terms of mining, mineral separation and smelting, said Tan Wanli, chief engineer of the Heli Rare Earth Smelting Co Ltd in east China's Jiangxi Province.

For small and medium enterprises in the industry, the new standards will make them suffer and even die out, given their capital and technological limits, Tan said. However, to big firms it can be an opportunity to accelerate development.

Experts said the process of tackling pollution in the rare earths industry was a gradual one, and the ministry should draft a supplementary mechanism concerning rewards and punishment following the introduction of the new rules.

China is the world's largest rare earths producer and exporter, with 90 percent of the world's mined rare earths coming from the country, though its deposits account for one third of the world's total.

China exported 35,000 tons of rare earths from January to November last year, up 14.5 percent from a year earlier.

Rare earths elements are crucial for the production of components used in a variety of high-tech products, but mining them can damage the environment.