The increase in prices by China's largest rare earth miner will not have a material effect on global prices or demand, according to a leading expert on the sector.

China Northern Rare Earth (Group) High-Tech Co Ltd increased the indicative price of praseodymium and neodymium oxides by 10,000 yuan per ton ($1,573) this week, a 4 percent hike. At the close of trading on Wednesday, their average price stood at 257,500 yuan per ton, according to the Shanghai Metals Market.

But Chen Chuandong, a senior researcher from Baotou Research Institute of Rare Earths, insists that supply still outstrips demand, and the biggest issue facing the market is illegal mining.