Why did GMDC share price rally 14% despite weakness in the Indian stock market? Explained

Mint

18-07-2025

Shares of Gujarat Mineral Development Corporation (GMDC), which is engaged in mining and the extraction of various minerals and metals, surged 14.3% in Friday's intraday session to hit a fresh 52-week high of ₹ 433 apiece. The rally followed reports indicating that the Prime Minister's Office (PMO) is likely to hold a key meeting today to address the intensifying rare-earth magnet crisis.
India has been exploring various options over the past few months, including sourcing rare-earth minerals locally, in a bid to reduce its dependence on China—which has imposed restrictions on these critical materials used in automobiles, defence, semiconductors, and other industrial products.
New Delhi is reportedly in talks with various domestic companies to establish long-term stockpiles of rare-earth magnets and is also considering offering production-linked incentives (PLI) to support domestic manufacturing.
In April, China imposed restrictions on the export of seven key rare earth elements: samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. These elements are essential in producing magnets like neodymium iron boron (NdFeB) and samarium-cobalt (SmCo), which are used in various applications, including EVs.
The resulting global ripple effects have already hit automakers, defense contractors, and wind-turbine manufacturers, underlining the delicate balance in electronics and clean-energy supply chains.
Mr. Harshal Dasani, Business Head at INVasset PMS, said that GMDC is stepping into a pivotal role. 'The company is developing a vertically integrated rare-earth hub, encompassing open-pit mining at Ambadungar, beneficiation, and a downstream separation and oxide plant at Bharuch,' he said.
Harshal added that the company's initial focus will be on light rare-earth elements—neodymium, praseodymium, lanthanum, and cerium— 'that together form the backbone of NdFeB permanent magnets, essential for EVs and wind turbines.'
GMDC plans to ramp up production to approximately 12,000 tonnes per annum of rare-earth oxides by FY28. 'This capacity, if realised, would significantly reduce India's reliance on imports and align with the government's upcoming incentive scheme for domestic magnet production, ultimately bolstering a more resilient and sovereign critical-mineral ecosystem,' he noted.
He also pointed out the urgency of such initiatives given China's dominance in the sector. 'Today, China controls roughly 70% of the world's rare-earth mining and nearly 90% of processing capacity.
GMDC is India's second-largest Lignite-producing company and top merchant seller of Lignite. It is a State Public Undertaking of the Government of Gujarat.
The company is engaged in mining lignite from deposit-rich areas across the state, company markets it to various high-growth industries, including textiles, chemicals, ceramics, bricks and captive power.
Its shares have been on an upward run since February, gaining 78%, bringing them close to their all-time high of ₹ 505, which was recorded in February 2024. Looking at the long-term performance, the stock has gained 210% over the last three years and 900% over the last five years.
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