Highlights
- Hindustan Zinc aims to produce rare earth minerals, specifically neodymium, with production expected to start around 2030 due to complex regulatory and technical challenges.
- India currently imports nearly 9,700 tonnes of rare earth elements, primarily from China, making domestic production crucial for economic and national security.
- The company’s rare earth initiative is part of a broader strategy to diversify revenue and support India’s goal of reducing mineral import dependencies.
Hindustan Zinc (HZL) – (opens in a new tab) a subsidiary of Vedanta Ltd (opens in a new tab). and India’s largest zinc producer – has announced plans to enter the rare earth elements (REE) sector as part of India’s strategy to reduce dependence on Chinese supply as reported across multiple mainstream media (opens in a new tab). A company executive revealed that it could take up to five years before HZL begins producing rare earth minerals, underscoring the long road ahead for India’s domestic REE ambitions. HZL aims to mine and process neodymium, a critical rare earth element used in permanent magnets for electric vehicles (EVs), wind turbines, and various electronic devices.
Hindustan Zinc is diversifying into critical minerals, such as rare earths, to reduce its reliance on imports. The miner recently secured a monazite-rich rare earth mining block in Uttar Pradesh – a first for India’s private sector – but extensive exploration and development mean production won’t start for years, as cited in Business Standard.
According to CEO Arun Misra (opens in a new tab), HZL was declared the preferred bidder for a monazite deposit in Uttar Pradesh in May, one of India’s first rare earth mining leases offered to a private company. Monazite ore is rich in neodymium, but it also contains radioactive thorium, making extraction complex. Misra noted that just the initial exploration of the block could take 3–4 years, contributing to the lengthy timeline before any rare earth output materializes. In other words, even with a project in hand, commercial production may not begin until around 2030, reflecting the substantial lead time required to establish a new rare earth supply chain in India.
Hurdles Pushing Production Five Years Out
Why, despite its size, resources, capital, and know-how, does it take a handful of years?
- Regulatory Barriers
India is estimated to hold 12.7 million tonnes of monazite, but access to the private sector is blocked due to regulations governing thorium. Only state-owned entities are allowed to mine and process these resources.
- Slow Exploration & Setup
Securing a mining block is just the start. Surveys, permitting, and plant construction can take 4–5 years, with no guarantee of commercial success until production ramps.
- High Technical Complexity
Rare earth processing involves low-grade ores, radiation hazards, and intricate chemical separation. Most Indian firms lack the advanced capabilities and safety systems required.
- Costly Infrastructure & Clearances
Separation plants are capital-intensive and face prolonged delays in environmental and radiation safety approvals due to bureaucratic red tape.
HZL is investing as part of Vedanta’s $20 billion capex plan for minerals, and seeking global partners for technology and funding, but meaningful output is unlikely before the late 2020s.
India’s Rare Earth Dilemma
HZL’s rare earth push comes against the backdrop of India’s broader challenge: reducing reliance on China for critical minerals. Rare earth elements are vital for high-tech manufacturing – from EV motors and wind turbines to smartphones and missile systems – yet India currently depends almost entirely on imports to meet demand. Between 2019 and 2024, India imported roughly 9,700 tonnes of REEs (about 1,950 tonnes per year on average (opens in a new tab)), with the majority coming from China. This import dependence leaves Indian industries vulnerable to supply shocks and geopolitical risks.
Those risks are not theoretical. China dominates the global rare earth supply chain, accounting for nearly 70% of world output and an outsized share of processing capacity. Beijing has leveraged this position by tightening export controls on certain rare earth products. In fact, China recently cracked down on exports of specialized REE magnets and materials (like terbium and dysprosium used in neodymium magnets), citing strategic concerns. These moves have sent “alarm bells ringing” in India’s manufacturing sector as Rare Earth Exchanges (REEx) has reported recently.
The Society of Indian Automobile Manufacturers (opens in a new tab) (SIAM) warned that Chinese export curbs on magnet alloys left some Indian automakers just days away from exhausting supplies, threatening production stoppages. Such scenarios underscore why India views domestic rare earth capabilities as critical for its economic and national security.
However, building an independent rare earth supply chain is a formidable long-term endeavor. China’s dominance stems from decades of investment and a geological advantage – it exploits bastnaesite minerals with low thorium content, avoiding some of the regulatory hurdles that plague India’s thorium-rich monazite. Moreover, China’s scale provides it with cost efficiencies: a recent report noted that while India holds ~6% of global REE reserves, it contributes less than 1% of output, largely due to higher extraction costs and regulatory limitations. This disparity highlights that India’s quest to “unlock” its rare earth potential will require not just mining leases like HZL’s, but also policy reforms, research and development, and infrastructure development on a significant scale.
There are signs of progress reports Outlook Business (opens in a new tab). New Delhi has begun easing restrictions to involve the private sector in critical minerals, as illustrated by Hindustan Zinc’s entry after decades of state monopoly. Government-led initiatives are also securing overseas mineral assets and formulating incentives for domestic processing and magnet manufacturing. Still, experts caution that catching up will take time. “Scaling up to high-purity metal production will take five to seven years… and developing magnets could be a 10–15 year journey,” Misra noted in an interview. In essence, HZL’s five-year timeline for first production is just the opening chapter in what is likely a decade-long (or longer) effort for India to establish an end-to-end rare earth value chain.
A Long Road to Self-Reliance
Hindustan Zinc’s bold push into rare earths marks a vital—if overdue—stride toward India’s long-sought self-reliance in critical minerals. With ambitions to generate 30% of its revenue from minerals like potash, halite, tungsten, and rare earths within five years, HZL is aligning itself with India’s broader strategic pivot to secure inputs for clean energy and defense. Yes, REEx suggests India’s moves are increasingly interesting, even impressive.
Yet this optimism is tempered by structural roadblocks: glacial permitting, outdated restrictions on monazite, limited processing infrastructure, and dependency on foreign tech.
While recent reforms to auction critical mineral blocks show promise, stakeholders warn that without aggressive streamlining and policy support, India will remain exposed to import disruptions and Chinese market dominance. If HZL succeeds in bringing a rare earth project online by decade’s end, it would mark a breakthrough—but still only dent the demand gap. As CEO Arun Misra puts it, building a “mine-to-magnet” ecosystem is entirely doable. Still, the next five years will be the real test of India’s ability to turn ambition into resilience.
The Company
Hindustan Zinc Limited (HZL) is one of India’s largest integrated producers of zinc, lead, and silver, and is a public company majority-owned by Vedanta Limited, with the Government of India retaining a minority stake of around 29.5%. Headquartered in Udaipur, Rajasthan, HZL operates five underground mines and several smelting facilities, producing over 1 million tonnes of zinc and lead annually. It is also among the world’s top 10 silver producers. In FY2024, the company reported revenues exceeding ₹30,000 crore (approx. $3.6 billion USD), with strong profitability driven by operational efficiency and high-grade ore reserves. HZL is listed on both the BSE and NSE and is expanding into critical minerals, including rare earths, as part of India’s strategic resource push.
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