(Yicai Global) June 23 -- Shares in China Northern Rare Earth (Group) High-Tech tumbled as much as 6.5 percent today after the country’s leading light rare earth products maker said that the benchmark price in its contract with rare earth concentrates supplier Baotou Steel Rare Earth (Group) Hi-Tech will be raised 45.8 percent next quarter due to the recent surge in the price of light rare earth products.

Northern Rare Earth’s share price [SHA:600111] was trading down 4.18 percent at CNY34.12 (USD5) as of 1:20 p.m. China time. Earlier in the day it slumped 6.5 percent to CNY33.30. While Baotou Steel Rare Earth’s stock [SHA:600010] dipped 0.4 percent to trade at CNY2.43 (USD0.36) apiece. Yesterday when the news broke it surged by the exchange-imposed limit of 10 percent.

The new transaction price between the two industry giants will be CNY39,189 (USD5,837) per ton starting from July 1, the Baotou, northern Inner Mongolia Autonomous Region-based firm said yesterday. And the trading volume will remain unchanged at 230,000 tons. Each quarter, the two companies meet to determine the price for the next quarter.

Both firms are owned by Baotou Steel Group, which has exclusive mining rights to the world’s largest rare earth mine, the Baiyun Ebo mine in deserts of Inner Mongolia.

Baotou Steel Rare Earth said last July that the company's tailings mine has rare earth reserves of 12.8 million tons of oxide, the second largest in the world, and capable of producing around 200,000 tons of rare earth concentrates a year.

Editor: Kim Taylor