Rare Earth Exchanges

Can India Ease China’s Rare Earth Elements Chokehold? Likely Not in Decades, If Ever

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Highlights

  • India and the US announce agreement on critical minerals supply chain cooperation, aiming to diversify away from China-controlled mineral supply chains.
  • India possesses the fifth-largest rare earth reserves globally but faces significant challenges in developing its rare earth industry across all stages.
  • Despite potential, India’s rare earth production is hindered by monopolistic control, lack of infrastructure, and heavy reliance on Chinese imports.

While earlier this month both India and the United States announced (opens in a new tab) a major agreement in one of the priority sectors for both countries – critical minerals supply chain cooperation, lots of unfolding pieces raise questions about many dynamics involving the mission-critical rare earth elements (REE) sector.  The two sides vowed to “expand and diversify” supply routes and leverage complementary strengths. The latest agreement underscores India’s potential as a major partner in the U.S.-led efforts to diversify away from China-controlled mineral supply chains. 

Both India and the USA are exploring deeper collaboration in the REE sector, while in the meantime  Beijing controls the market, especially in the processing sphere. And in the unfolding geopolitical realities between America and China rare earths become the critical choke point due to their use in military applications and Beijing’s willingness (opens in a new tab) to use its dominance to restrict access for political and strategic gains reports Nayan Seth for South Asian Voices (opens in a new tab).

Can India emerge as the dismantler of China’s chokehold?

As Rare Earth Exchanges recently pondered on news of an immune  REE magnet production facility in India, can the south Asian nation and fifth largest economy supersede China’s REE production at some point in the future?

India, it turns out possess the fifth-largest (opens in a new tab) reserves of rare earths, possibly representing a key piece in the unfolding global dynamic,  building a stable and diversified supply chain.

But a hard reality:  India ranks far behind in all stages of rare earth development – mining, processing, refining, and magnet production. It also faces multiple challenges such as a lack of private capital, technology access, and environmental concerns, meaning the prospects for an Indian hero to show up represents a stretch.

From the streamlining of laws to a complete lack of infrastructure, it’s ironic that India represents one of the few places on the planet that theoretically could take China on.

Rare Earths, Complex Challenges 

Despite having around six percent of the world’s reserves, India produces less than one percent of the total share of rare earths, reports South Asian Voices.

Partially inhibiting a dynamic, fast paced REE scene is the fact that the one major company in the entire country, Indian Rare Earth Limited (IREL), runs a monopolistic organization, at least on production due to a ban on beach and sand mining in 2019.

The government since then has approved (opens in a new tab) only a selected list of private exploration companies to enter the rare earth market. 

What about separation and refining of REE in India? Just a couple places including the joint venture (opens in a new tab) between IREL and Japan’s Toyota Tsusho Corporation in the state of Andhra Pradesh.

Downstream industries, such as alloy-making and magnets, are non-existent. Like other countries, India too heavily (opens in a new tab) relies on China, with nearly 60 percent of the total imports of rare earths sourced from Beijing. 

Follow the link (opens in a new tab) to learn more about the challenges India faces should it seek to take on China.

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