About 90 percent of China's rare earth mining companies are incurring losses as rare earth prices continue to plummet due to overcapacity and illegal mining, industry officials said on Saturday.

Chen Zhanheng, deputy secretary-general of the Association of China Rare Earth Industry, said that most of the rare earth companies have been consistently losing money with many even facing the probability of unit closures this year.

"Some small smelters have stopped paying admission fees as the situation is becoming worse," he told China Daily on the sidelines of the 7th China Baotou Rare Earth Industry Forum held in Baotou of the Inner Mongolia autonomous region, which accounts for most of the country's output.