Highlights
- India’s sole rare earth miner, IREL, faces critical challenges with Chinese export controls limiting critical mineral supply.
- Despite having 6.9 million metric tons of reserves, IREL imports 54,000 tons of rare earth magnets and lacks processing capacity.
- India aims to develop domestic rare earth capabilities by opening exploration blocks and prioritizing local magnet manufacturing.
India’s lone rare earth miner, Indian Rare Earths Ltd (opens in a new tab) (IREL), finds itself at the center of an unfolding industrial crisis as China’s tightening export controls paralyze Indian automakers’ access to critical rare earth elements (REEs). Despite holding 6.9 million metric tons in rare earth reserves, India imported nearly 54,000 tons of rare earth magnets in FY25, most from China. But since April, Chinese authorities have imposed licensing restrictions, halting shipments and demanding disclosure guarantees that limit re-exports and defense uses.
IREL, a state-owned “Miniratna (opens in a new tab)” (opens in a new tab) company under the Department of Atomic Energy, has struggled to meet domestic demand, citing low processing capacity, the absence of midstream industries, and leadership instability. Though the company posted FY24 revenues of₹2,264 crore and profits over ₹1,000 crore, its annual report warns of grim outlooks, mounting inventory, and global price pressures across its portfolio.
Historically bound by the Atomic Energy Act, India prohibited private sector rare earth element (REE) mining until August 2023. Only this year did auctions for 13 exploration blocks open, attracting over 20 bidders, but commercial output remains years away. Meanwhile, IREL’s Orissa complex ramped up chemical output by 9.8%, but its High-Purity REE division saw a 9% production decline to avoid surplus accumulation.
In a bid to preserve the neodymium supply, India has reportedly suspended IREL’s 13-year export agreement with Toyota Tsusho. Over 1,000 tonnes of rare earths were shipped to Japan in 2024—one-third of IREL’s total output. While Japan remains a strategic partner, India is pivoting to prioritize domestic magnet manufacturing, backing firms like Midwest Advanced Materials, which will start NdFeB magnet production within six months.
IREL plans to double its neodymium output to 900 tonnes by 2030—but it has lacked a permanent chairman since December 2024. The absence of long-term leadership compounds a broader crisis: over 85% of board positions across Indian CPSEs remain vacant.
Implications for Global Investors
India’s rare earth awakening is late, fragmented, and reliant on a single state entity that lacks agility. Without rapid midstream investment, private sector empowerment, and policy coordination, India risks missing its moment to decouple from China and secure a sovereign REE supply chain.
This press release is based on publicly available reporting by Vikash Tripathi for Outlook Business (opens in a new tab) (India), June 17, 2025.
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