(REUTERS) -- China's Ministry of Industry and Information Technology has ordered local governments to shut small gold mines with a daily ore processing capacity of less than 50 tonnes and is working on a plan to consolidate the sector, the Shanghai Securities News said on Tuesday.

Citing unidentified sources who attended a national gold mining conference, the industry ministry is drawing up a blueprint to better regulate gold miners, such as shutting mines with a daily gold processing capacity of below 100 tonnes and halting approvals for small ore processing companies.

The move is part of China's broader efforts to conserve its resources and to rein in heavy pollution caused by rampant mining, which has fouled rivers, contaminated soil and caused cancer-related deaths to soar in some areas.

China, the world's largest bullion producer, currently has no limits on gold production and the record-high prices over the past two years has encouraged miners to boost gold output at all costs.

Gold production rose 8.6 percent in 2010 from a year ago and was up 3.87 percent in the first eight months of this year.