The World Trade Organisation says China's export controls on rare earths are illegal and the 15-year quota system must now be abandoned, the state agency Xinhua reported last week.

Rare earths are 17 elements lurking in the middle of the periodic table, used in everything from iPads, iPhones, flat-screen TVs to missile technology.

China's export quotas have been in place since 1999, according to the country's Association of China Rare Earth Industry, as the country tried to cut pollution arising from production of the minerals and to conserve supplies.

In recent years, China was also building up a national stockpile because of growing domestic demand. The move has driven prices higher.

However, the World Trade Organisation believes that the quota system violates trade rules.

China produces 97 per cent of the globe's rare earths, but it has not fully used up its quotas since 2011 because of weaker overseas demand. Attempts to control the export of the rare earths has also put strain on China's relations with other countries, notably Japan and the US, which have invested in trying to mine the minerals themselves.

Japan found an estimated 100 billion tonnes of the minerals at 78 locations on the Pacific seabed.