China Minmetals, Guangdong Rising Nonferrous Metals, and JLMAG Rare-earth Co Ltd will hold stakes in the group, which means they will have indirect access to resources, he said. "Chinalco (Aluminum Corporation of China) will not be involved in the new group," said Wang.

"We will not give away any resources to companies that haven't invested in the rare-earth processing sector," he said.

Earlier reports said Minmetals and Chinalco are competing to develop rare-earth resources in Jiangxi, which has verified reserves of 2.89 million tons of ion-absorbed type rare-earth elements, accounting for 40 percent of the national total.

Chinalco announced in September 2010 that it had acquired a majority stake in Jiangxi Rare Earth and Rare Metals Tungsten Group (JXTC) and planned to invest 10 billion yuan ($1.5 billion) during the next three to five years to gain rare-earth resources in the province.

Ganzhou Rare Earth has already reduced the number of mining licenses to 42 from 88 last year, and will further merge them into one license, Wang said.

"Although Ganzhou Rare Earth holds all the mining licenses, it is like a billing company. Rare-earth resources have been exploited by local miners and when they want to sell the minerals they will need to obtain a quota from Ganzhou Rare Earth," he said.

"The new group will have actual power in controlling rare-earth resources after it consolidates all the mining licenses into one," he added.

Rare earths, a group comprising 17 elements, are used in a number of high-tech areas, such as wind turbines, missile guidance systems, hybrid car batteries and Apple Inc's iPads.

Large State-owned mining companies are all eyeing at getting a slice of the cake from the strategic resources.

Although those central State-owned companies have entered the processing sector, they have not been involved in the mining sector, which is the most critical aspect.

As the world's largest rare-earth producer and exporter, China has seen reserves depleted and suffered environmental damage as a result. In response, the government has implemented a number of measures to combat illegal mining and to accelerate the consolidation of the scattered industry.