French chemicals company Rhodia said on Monday it had signed a strategic alliance with Chinese group Chinalco in rare earths, the scare raw materials key to much of modern technology.

The accord with Chinalco unit China Rare Metals and Rare Earth Co., covers the supply of rare earths plus technological and market development, Rhodia said in a statement.

Part of the giant French group Solvay, Rhodia Rare Earth Systems said it is the world leader in chemical applications of rare earths, working with auto, lighting and electonics companies.

China produces more than 95 percent of the world's rare earths, 17 elements critical to making everything from iPods to electric cars and missiles.

Rhodia is one of only two European producers, along with Estonian firm Silmet, part of the US Molycorp group.

Chinalco, China's biggest alumina producer, is seeking to diversify from aluminium into other sectors such as coal, iron ore, rare earths and copper to become a global commodities firm.

China sparked unease when it cut rare earths exports for the first half of 2011 by 35 percent, having slashed them by 72 percent for the second half of 2010, in an effort to ensure its own industries got supplies.

Some Western firms complained at the time that China was seeking to monopolise rare earths, a charge Beijing rejected.