India’s significant dependence on China for the importation of rare earth minerals has recently come to light. Despite India having 6% of the globe’s rare earth reserves, it generates only 1% of global output, and relies largely on China for its rare earth mineral needs. For example, in 2018-19, 92% of rare earth metal imports by value and 97% by quantity were sourced from China.
Confederation of Indian Industry’s (CII) Recommendations
The Confederation of Indian Industry (CII) urges the government to spur private mining in relation to the sector and broaden supply sources. CII recommends the establishment of an ‘India Rare Earths Mission’, staffed by professionals akin to the India Semiconductor Mission, as a vital component of the Deep Ocean Mission. It has also proposed to include rare earth minerals as part of the ‘Make In India’ campaign, drawing inspiration from China’s ‘Made in China 2025’ initiative, which concentrates on new materials, including permanent magnets made using rare earth minerals.
What Are Rare Earth Metals?
Rare Earth Metals are a group of seventeen metallic elements comprising fifteen lanthanides on the periodic table, along with scandium and yttrium, which share similar physical and chemical properties with the lanthanides. The 17 Rare Earths include cerium, dysprosium, erbium, europium, gadolinium, holmium, lanthanum, lutetium, neodymium, praseodymium, promethium, samarium, scandium, terbium, thulium, ytterbium, and yttrium. These minerals are essential in many modern technologies due to their unique magnetic, luminescent, and electrochemical properties.
How China Gained Control of Rare Earths
China has gradually established global dominance in the rare earth sector, producing 90% of the world’s needs at its peak. Today, its share has declined to 60%, with the remaining being produced by other countries including Australia, India, Japan, and the United States. Since 2010, when China limited shipments of Rare Earths to Japan, the US, and Europe, production units have emerged in Australia, and the US, along with smaller units in Asia, Africa, and Latin America. However, the major share of processed Rare Earths still resides with China.
India’s Present Policy on Rare Earths
Exploration in India is conducted by the Bureau of Mines and the Department of Atomic Energy. Mining and processing have been previously performed by minor private players; however, it is currently centered in the hands of IREL (India) Limited, a Public Sector Undertaking under the Department of Atomic Energy. India has granted government corporations such as IREL a monopoly over the principal mineral that contains REEs: monazite beach sand, found in many coastal states.
Steps Taken Globally and by India
Globally, the Multilateral Minerals Security Partnership was announced in June 2022 to construct robust critical minerals supply chains required for climate objectives. Countries involved include the US, Canada, Australia, Republic of Korea, Japan, and various European countries, excluding India. In India, the Ministry of Mines has revised the Mines and Minerals (Development and Regulation) Act, 1957 through the Mines and Minerals (Development and Regulation) Amendment Act, 2021 to bolster mineral production and ease business operations in the country.
The Way Forward
India should learn from other advanced economies on securing their mineral needs and aim to join multinational forums ensuring critical mineral supply chains. Also, a top-level decision-making approach within the government is imperative to strategize on creating vertically integrated supply chains of green technologies manufacturing. A new Department for Rare Earths (DRE), playing the role of a regulator and enabler for businesses in this sector, needs to be established.