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Mint
6 days ago
- Business
- Mint
India's rare earths riddle: No quick fix as China holds the magnetic key
There seems to be no quick fix in sight for India's rare earths predicament as it scrambles for magnets, slaps export curbs and weighs production incentives, while a delegation from the country waits to meet Chinese officials. Issues related to raw material availability, global magnet supply, import duty structure and access to technology are key constraints that could delay any local manufacture of rare earth magnets in the short to medium term, said S.B. Mohanty, acting chairman and managing director of IREL Ltd, the state-owned rare earths company. On 4 April, China restricted exports of seven rare earth elements and magnets critical in defence and automobile sectors. Since Indian automakers have relied exclusively on China for magnets, the crunch threatened production at companies like Tata Motors Ltd and Maruti Suzuki India Ltd, triggering a search for alternatives. "We don't make the more powerful batteries that automakers want, because we don't have access to a few rare earth elements that are crucial raw materials in the manufacturing process," Mohanty said in an interview. IREL mines and refines critical raw material that goes into rare earth magnets; and at full capacity, it could cater to a third of India's requirement. However, its plants operate at half capacity, and the company doesn't make the magnets themselves. On 17 June, Mint reported that the company does not have a full-time CMD since December. Currently, China controls 90% of the world's battery production and Japan about 7%, while the rest come from countries like Vietnam and Thailand which account for 1% each. Japanese firms make advanced batteries with specialized applications, some of which even China imports. That essentially means for any immediate requirement, India has no option but to lean on China. "If China relaxes its restrictions, then we will return to normal; but if it doesn't, there are no quick solutions," Mohanty said. On 13 June, Reuters reported that India has asked IREL to suspend a 13-year-old agreement on rare earth exports to Japan to save supplies for domestic needs. At a recent meeting with industry executives, commerce minister Piyush Goyal asked IREL to stop exports of rare earths, mainly neodymium, used in magnets for EV motors, the report added. Union industry minister H.D. Kumaraswamy last week said the government will decide on a scheme to support domestic production of rare earth magnets in 15-20 days. Separately, India is looking to source rare earth magnets from countries such as Vietnam and Japan, Mint reported on 24 June, citing a government official. The government is currently talking to industry stakeholders on the quantum of government support to process rare earths in India. According to IREL's Mohanty, even though a factory to make auto-grade rare earth magnets can be built in a year for ₹800 crore with some help from the government, the problem will be in sourcing the raw materials. Among the seven elements in the Chinese ban list are yttrium, gadolinium and lutetium, which enhance the performance of a normal rare earth battery at high temperatures. India has few deposits of these elements and China imports them from Myanmar, Vietnam and Sri Lanka. "It is not as if we don't have these metals, but our mine yields are so low that they are unremunerative and that will require us to look for new sources of imports like Australia or even Myanmar," says Mohanty. "We will also have to find out who will sell us equipment for factories as they can't be ordered off the shelf." It's not that there was no attempt to make rare earth magnets domestically. As the industry's nodal agency, IREL had invited expressions of interest from private players to set up manufacturing units in 2020. "A few private players showed interest, but all of them backed out as the import duty structure for raw materials was more than intermediate and finished products, and that made the project unviable. At that time, the lower duty on intermediates was essentially to favour user industries like automobiles," says Mohanty. For the future, Mohanty has a few recommendations. He says that for the short term, India should stockpile batteries, increase capacity utilization (which IREL is doing now), source and license global technology, and recycle more to create a circular economy. He says that while India recycles only 5% of its old magnets, Chinese rates stand at over 80%. "We must understand that the key levers in this business are with China. Our batteries are subsidized to the extent 35% already to match Chinese prices, and if we do manage to increase production, China can drop prices more and make our new factories unremunerative," says Mohanty. "But, if we want to secure our industries in the long run, there is no option but to create local alternatives whatever the cost."
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Business Standard
6 days ago
- Business
- Business Standard
Datanomics: India looks at options amid crunch of rare earth materials
China and the United States produced nearly 70 per cent and 11.5 per cent of the world's production of rare earth elements (REEs) respectively in 2024 Yash Kumar Singhal New Delhi Listen to This Article The Centre recently asked IREL, a public sector undertaking (PSU), to suspend a 13-year-old agreement on export of rare earth elements (REEs) to Japan to safeguard supplies for domestic needs. This comes in the wake of Chinese restrictions on the export of seven rare earth metals (REMs) and rare earth magnets, which has put the Indian automotive and electronics industry in a precarious position, crippling their production and supply. Global distribution China and the United States respectively produced nearly 70 per cent and 11.5 per cent of the world's production of REEs in 2024. Myanmar produced around 31,000 tonnes (eight per
Time of India
7 days ago
- Business
- Time of India
Govt eyes sops for rare magnets to reduce dependence on China
Govt is working on an incentive scheme for rare earth magnets and is likely to subsidise processing units as it seeks to develop a domestic base to reduce its dependence on China. A decision on rolling out the scheme will be taken in 15-20 days, heavy industries and steel minister H D Kumaraswamy said on Tuesday. Explaining the rationale, an official said, "There is hardly a 5% difference in prices of rare earth oxides and rare earth magnets... China wants to maintain its monopoly by keeping the price of magnets very low." According to official estimates, public sector undertaking IREL (India) can supply enough rare earths to make 1,500 tonnes of magnets. "Converting these rare earths to magnets will take two years," the official said. Consultations with stakeholders are underway to determine the quantum of subsidy to be offered under the scheme. "One Hyderabad-based company... they are showing interest. They have promised that they will deliver 500 tonnes by this year-end (Dec). We will have discussions with the mines minister," Kumaraswamy said. China's recent restrictions on exports have caused widespread disruption, particularly for auto players. While govt and industry are seeking alternative sources of procurement, officials said 30 auto companies sought authorisation from the Directorate General of Foreign Trade to import rare earth magnets from China a fortnight ago, so that production is not impacted.
Time of India
24-06-2025
- Business
- Time of India
Govt eyes sops for rare earth magnets to reduce dependence on China
NEW DELHI: Govt is working on an incentive scheme for rare earth magnets and is likely to subsidise processing units as it seeks to develop a domestic base to reduce its dependence on China. A decision on rolling out the scheme will be taken in 15-20 days, heavy industries and steel minister H D Kumaraswamy said on Tuesday. Explaining the rationale, an official said, "There is hardly a 5% difference in prices of rare earth oxides and rare earth magnets... China wants to maintain its monopoly by keeping the price of magnets very low." According to official estimates, public sector undertaking IREL (India) can supply enough rare earths to make 1,500 tonnes of magnets. "Converting these rare earths to magnets will take two years," the official said. Consultations with stakeholders are underway to determine the quantum of subsidy to be offered under the scheme. "One Hyderabad-based company... they are showing interest. They have promised that they will deliver 500 tonnes by this year-end (Dec). We will have discussions with the mines minister," Kumaraswamy said. China's recent restrictions on exports have caused widespread disruption, particularly for auto players. While govt and industry are seeking alternative sources of procurement, officials said 30 auto companies sought authorisation from the Directorate General of Foreign Trade to import rare earth magnets from China a fortnight ago, so that production is not impacted. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Time of India
24-06-2025
- Business
- Time of India
Meetings underway to mitigate Rare Earth magnet crisis: Heavy Industries Minister H D Kumaraswamy
India is exploring options to mitigate the crisis due to rare earth magnet supply disruptions, Union Heavy Industries Minister H D Kumaraswamy said Tuesday. 'We are working on it (addressing the rare earth magnet crisis ). Midwest , a Hyderabad based company, has shown interest. They are targeting 500 tonne rare earth magnet production by this year end, aiming for 5000 tonne production in the next,' Kumaraswamy told journalists Tuesday. At the sidelines, officials said an incentive scheme for rare earth magnets is likely to subsidise processing units. India's own rare earth magnet production is also anticipated in the coming two years. Indian automobile players had red-flagged curbs on supplies of rare earth derived permanent magnets. Responding to queries on the current situation, a senior official said, 'As of today, things look better. Nobody has come back to us saying I am halting production.' His comments follow meetings of Chinese Foreign minister, Wang Yi with India's National Security Advisor, Ajit Doval. In a statement, a Spokesperson of China's Foreign Affairs Ministry said, 'China and India should adhere to the important consensus that both sides are opportunities for each other's development, pose no threat to one another, and are partners rather than rivals.' Officials said Indian companies can also import fully assembled components from China with no restrictions. 'Existing government incentive schemes such as those for auto component and electric vehicle manufacturing already have exemptions for allowing these imports,' the official added. Besides importing minerals, India is also preparing to incentivise domestic processing of rare earth supply chains. Explaining the need for incentives, the official said, 'There is a hardly 5% difference in the prices of rare earth oxides and rare earth magnets…China wants to maintain its monopoly by keeping the price of magnets very low.' According to official estimates, public sector undertaking IREL (India) can supply enough rare earths to make 1500 tonnes of magnets. 'Converting these rare earths to magnets will take two years,' the official added. Kumaraswamy also launched the application process for Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI). This scheme offers lower duties for import of high-end electric cars if automobile majors invest in India. Commenting on how participation is being drawn towards SPMEPCI, the official said, 'We are writing to embassies of countries which have established automotive industries, encouraging them to participate in the scheme.' Invitations will be extended to Vietnam, Germany, Czech Republic, United Kingdom, and United States of America, the official added.
