Tasman to start rare earth process tests, shares up 32 pct

* To test rare earth extraction for Swedish mine

* Shares close 32 pct higher at C$1.77

TORONTO Nov 16 (Reuters) - Shares of Tasman Metals (TSM.V: Quote) rose about 32 percent on Tuesday after the company said it would start chemical tests on minerals from its Norra Karr rare earth project in Sweden.

The Vancouver-based exploration company said that it would test a 100 kilogram sample of rare earth-bearing mineral to determine the best method for processing the rare earths.

Extracting rare earths, which are used in LCD televisions and wind turbines among other technologies, is a complicated procedure that often involves acid or extreme heat.

Once the rare earths are removed from the mineral, they must be further processed to separate the 17 elements in the complex and refine them into oxides.

Tasman expects results from its preliminary chemical tests in the first quarter of 2011.

Earlier on Tuesday, Chinese government data indicated that 2010 rare earth exports were nearing quota limits and that the supply could dry up for the rest of the year. [nTOE6AF06C] China accounts for 97 percent of the world's rare earth supply.

Tasman's shares fell as low as C$1.20 on Tuesday, before soaring up 32 percent to C$1.77 on the TSX Venture Exchange.

Meanwhile, the company's peers like Great Western Minerals (GWG.V: Quote) and Ucore Rare Metals (UCU.V: Quote) closed down more than 5 percent. (Reporting by Julie Gordon; Editing by Frank McGurty)