Critical minerals: India should bide its time and build strategic capacity

First Post

23-07-2025

India currently produces only 1 per cent of global output in critical rare earth minerals even though it has 6 per cent of the reserves—but concrete steps are now underway to boost production and diversify supply sources read more
A worry about what to do with EV lithium batteries once their life is over, in about eight years, based on current technology, is being addressed. Instead of heaping them up without use, the batteries can be recycled to extract critical rare earth minerals. This process is faster and is at least 25 per cent cheaper than setting up greenfield mines and refining facilities, and it deals with some part of the waste material at the same time.
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India could even import expired EV batteries to recycle their rare earth minerals and magnets. It already runs some of the largest ship scrappage facilities in the world and attracts many large ships at the end of their useful life from all over the world.
China's trade war with America is based on the restricted sale and export of critical minerals/metals/magnets. But it also restricts such sales in general so that the requirements cannot be sourced from third countries not on the embargoed list. This has prompted most of the world to seek alternatives.
India and its fast-developing aatmanirbharta manufacturing programme has been hit hard as stockpiles of the rare earth magnets run out.
Besides recycling, several countries, including major consumers in the US and Europe, plan to increase the mining of their own resources and set up refining plants for end products.
So far, most countries that have been hit with Chinese embargoes were content to source them from China for its cost advantages and the fact that mining and refining rare earth minerals is a highly polluting business. Despite being a near monopoly on the part of China, the price of rare earth minerals, metals, and magnets has been falling, according to Australia. This may be another engineered tactic on the part of the Chinese to keep competition out.
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However, even as countries resolve to reduce this dependence on China, alternative facilities cannot sprout overnight. The sudden shortage is crippling the Electrical Vehicle (EV) production market. In addition, the renewable energy resources area, in which India has been making rapid strides, is also hampered. Likewise, the crucial defence manufacturing ventures that use sophisticated electronics as well. For the moment the leverage advantage is definitely with China.
India is not only planning to mine its own reserves of rare earth minerals but has also been active in setting up trade agreements with other countries in Africa and South America that have these resources. America has large reserves in-country as well and could well become a newly developed source.
So while China, because of its dominance and economies of scale in the field, can hamper and disrupt various activities for now, it is probably not for too protracted a period. Other supply chains are under development, with cooperation between nations without involving China. Explorations are ongoing in new countries like Oman, Vietnam, Sri Lanka, and Bangladesh. Thereafter, as this effort is up and running over the next few years, China may find itself in trouble trying to export these very monopolistic resources that it has spent so much time and money developing.
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Meanwhile, India is already taking some concrete steps. It proposes to incentivise domestic production of rare earth minerals and magnets by Indian companies with an amount of Rs 1,345 crores. The key target sectors are electric vehicles, electronics, and defence. One item, for example, neodymium magnets, is crucial in EVs, wind energy systems, mobile phones, and defence equipment.
The early Indian initiative is designed to support the production of 1,500 tonnes of rare earth magnets. India currently produces only 1 per cent of global output in critical rare earth minerals even though it has 6 per cent of the global reserves. India is also exploring a partnership with Australia, which has at least 5 per cent and is selling it to Japan, which has managed to reduce its dependence on China to 60 per cent. However, Australia is highly dependent on China for its trade and investments and cannot go against Chinese wishes.
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Therefore, India is also looking elsewhere for supplies. Presently, China controls 69 per cent of the rare earth minerals, metals, and magnets production and market. America contributes 12 per cent, Myanmar holds 11 per cent. Myanmar is under strong influence of China, which takes the joint tally to about 80 per cent. The manufacturing process combines light rare earth elements such as neodymium and praseodymium with traces of heavy rare earths such as dysprosium and terbium. Procuring all these elements is not easy. India currently produces the light rare earth items, some 2,900 tonnes worth, and none of the heavy earth minerals. Most of the product is found in coastal beach sands with low mineral content. Samarium-cobalt magnets are being developed in a pilot plant for the defence industry. Explorations are going on in different coastal and sand-rich interior states like Rajasthan.
It's lithium that has been discovered in Jammu and Kashmir, but that is another part of the EV jigsaw.
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Efforts are also ongoing to develop sodium-ion batteries in countries like Japan and ever more efficient internal combustion engines with almost nil pollution in various developed economies. This will prolong and preserve their automotive fuel-based industries. Then, there is propulsion using hydrogen. India has made both buses and trains at the trial stage that can run on hydrogen and have nil pollutants. It also has hydrogen-producing factories. Other technological applications such as nuclear energy are also being explored to take a leaf out of nuclear-powered submarines, aircraft carriers, and some specialised ships.
For the moment, however, there is very little option but to persuade China to sell us rare earth minerals and magnets to keep various industries going. This will take negotiation and give and take. America, for example, which had put restrictions on high-end electronic chips from being sold to China, has been forced to lift them in exchange for the rare earth products.
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The writer is a Delhi-based political commentator. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost's views.