Makers of fluorescent lamps and permanent magnets are feeling the pressure as rare earths become more expensive and scarce.

Downstream industries are reeling under soaring costs of rare earths as the materials continue to be in short supply following the China government's clampdown on output and closure of hundreds of mines.

A large number of illegal mines that used to supply an estimated 30,000 to 40,000 tons of rare earths every year have been recently shut down. New mining licenses are suspended until June 2012.

Aside from the shortage, the recent steep climb in costs is attributed to speculation, and stockpiling by suppliers in anticipation of further price increases.

In the middle of June this year, the price of terbium oxide, which is used in hybrid cars, fluorescent lighting and sonar systems, rose 120 percent to $3,000 a kg within three weeks.

Similarly, phosphors, a key raw material in energy saving lamps jumped from $85 per kg in January to $232 in June.

Europium oxide, used in energy-saving light bulbs, plasma TVs and smartphones tripled from about $1,260 a kg to $3,400.

During the same period, dysprosium oxide, used for neodymium-iron-boron magnets found in wind turbines and computer hard drives, doubled from about $720 per kg to $1,470.

China produces more than 95 per cent of the world's rare earths requirements but has only 30 to 40 percent of global reserves.