A New York Times article (January 21,2011, page B1) describes the takeover of 11  districts in China that have rare earth deposits.  This increased control will let the government be more strategic regarding exports of rare earths but also reduce illegal mining. The article claims that 50 % of rare earth supply is from illegal production with acids and materials disposed off in waterways and that this supply will be controlled.  However, control of exports through quotas is banned by the W.T.O. and industry experts are worried that more control of the supply chain will permit Chinese officials to further control sales of these metals that are crucial for the alternate energy industry.  Is it reasonable to expect that greater supply chain control will decrease available rare earths ? Is the benefit of reducing illegal mining greater than the potential cost due to strategic actions by governments ? How should companies who make batteries or smartphones react to such potential supply disruptions and associated price surges ?