China, with rare earth reserves accounting for about 23 percent of the global total, supplies more than 90 percent of the world's demand, but at the cost of much pollution.
As a result of the WTO ruling, it is very likely that China will lift export tariffs. The existing export quota system has been "invisible" in recent years since actual export volumes fell short of quotas.
Prices of the minerals were weak in 2013, affecting Chinese producers.
In Baotou, Inner Mongolia, which has 34 large-scale producers, the industry's revenue reached 1.81 billion yuan ($290 million) last year, down 25.3 percent.
Profits sank 4.7 percent to 210 million yuan, while exports slid 47.2 percent to 31 million yuan.
China's leading rare earth producer, Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co Ltd, said net profit slumped 71.7 percent year-on-year to 69.38 million yuan in the first quarter of 2014.
Revenue tumbled 52.8 percent to 1.09 billion yuan.
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