China's rare earth industry has witnessed a surge in the past two years as industrial scale and technology have been enhanced and the quality of industrial operations has been improved.

In 2011 and 2013, the country's rare earth industry raked in 15.9 billion and 10.8 billion yuan in profits, respectively. In the first half of 2013, the industry has produced 35,000 tons of smelting separation products, creating a profit of two billion yuan.

With prices on the rise and supplies tight in the international market, foreign countries, including the United States, Australia, Russia, India, Brazil and Thailand, have once again begun exploiting and producing rare earth themselves in recent years.

According to incomplete data, the capacity of rare earth from foreign countries has reached nearly 70,000 tons. But a diversified rare earth supply structure is forming since these nations resumed production, said Zhang Anwen, deputy secretary-general of the China Rare Earth Industry Association, at the forum.

"The output of each rare earth mine in the United States, Australia and Russia is often less than 25,000 tons. Although Vietnam, India, Canada and South Africa have launched some rare earth projects, they need plenty of time to put them into operation and realize the capacity," said Zhang Zhong, president of Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-tech Co China's top rare earth producer.

Industrial insiders said that global rare earth supplies continue to rely heavily on China, which has driven consumption of rare earth resources and environmental problems in the country.

"If the diversified supply structure can be formed, it will benefit the sustainable exploitation of rare earth and prolong the service time of Chinese rare earth mines, but the competition that China faces in the future will increase as well," Zhang added.

"The international competitiveness of China's rare earth is being weakened, as the competitiveness mainly exists in the light rare earth section," said Ma Rongzhang, secretary-general of the China Rare Earth Industry Association, adding that as the the foreign market's capacity expands in the future, Chinese light rare earth producers will face great pressure.

However, some insiders still hold a positive attitude toward the new challenge, as heavy rare earth still dominates the overall global market.

Moreover, low production costs in domestic light rare earth enterprises will also help China hold a dominant position, they believe.