Rare earth magnets: Supply link from mine to magnet

New Indian Express

31-07-2025

Rare earth magnets are the invisible force behind the world's transition to electric vehicles, renewable energy, and cutting-edge defence systems. At the heart of these technologies lies a small but indispensable component: the neodymium-iron-boron permanent magnet. Without it, electric motors stall, wind turbines falter, and advanced missile systems lose precision. India, despite its sizeable rare earth reserves, has no domestic capacity to produce these critical magnets. We have to address this strategic blindspot that could cripple the country's ambitions in EVs, renewables, and defence unless addressed immediately.
Why the markets won't solve this
The rare earth supply chain is notoriously capital-intensive and high-risk. Developing a mine-to-magnet project can take 5-10 years, with massive upfront costs and no guaranteed cash flows. Traditional project finance models do not work here as banks see too much risk and not enough precedent. Experience shows the market has been flooded to drive down prices and kill off competitors multiple times. No investor will risk capital in a sector where prices can fall below the cost of production overnight due to geopolitical manipulation.
Under these conditions, mere funding support engineered through grants and tax concessions may be sub-optimal. Governments must support an enterprise with an assured offtake and price over its lifetime. In effect, the private sector takes on the technology and production risk, and the government takes on the complete market and revenue risks.
In 2022-23, Apple signed a multi-year, $500-million procurement deal with a Nevada-based rare earth miner and processor. Crucially, the tech giant agreed to prepay $200 million to help the company establish a full-fledged domestic supply chain—from mine to magnet. This wasn't charity; it was strategic foresight. Apple, whose devices and production lines depend heavily on rare earth magnets, saw the writing on the wall: continued reliance on foreign supplies was a vulnerability.
Soon after, the US Defense Advanced Research Projects Agency (DARPA) stepped in with an even more dramatic move. It committed to guarantee a price of $110/kg for neodymium-praseodymium (NdPr) oxide, a key ingredient in rare earth magnets, at nearly double the prevailing global market price. Why? Because without such assurance, no company would risk building costly infrastructure in a price-volatile, externally-dominated market.
India imports nearly all the 900 tonnes of magnets used annually despite holding the fifth-largest rare earth reserves in the world. Not a single commercial magnet factory exists in the country as of 2025. India's only meaningful processing activity is via IREL (India), which produces about 1,500 tonnes of NdPr oxide, most of which is used in R&D or exported.