Why India's Rare Earth Reserves Remain Untapped While China Leads The Market?

News18

05-06-2025

Last Updated:
India and the US have substantial REE reserves, but extraction and refining are difficult due to radioactive materials that threaten the environment and public health
In the modern tech-driven world, Rare Earth Elements (REEs) have become as vital as food grains—powering everything from electric vehicles and smartphones to defence systems and wind turbines. With China mining 70% of the world's REEs and refining 90%, its dominance has left the global supply chain heavily dependent on a single source for these critical materials.
China's stronghold did not happen overnight. Since 1990, it has strategically prioritised these elements, adapting its regulations, technology, and policies accordingly. The country possesses the largest REE reserves globally and benefits from low production costs due to cheap labour and lax environmental regulations.
Additionally, the availability of inexpensive electricity facilitates energy-intensive processes like refining. China has also advanced its technology, with 39 universities conducting research in this field. In stark contrast, the United States, the world's most developed country, does not offer a single course on REEs.
China has also frequently used these minerals as a political tool. In 2010, it halted exports to Japan, signalling to the world that these minerals could be leveraged as strategic assets.
What Problems Do India Face?
On the other hand, countries like India and the United States face numerous challenges. Although they have substantial reserves, extracting and refining these elements is not easy. The process involves handling radioactive materials, which pose risks to both the environment and public health. Strict environmental regulations in India and the US make such projects costly and complex.
Private companies in India are also minimally active in this sector. Most raw materials are sent to China for refining, which is why India imports 99 percent of its magnets and batteries from China.
India's electric vehicle (EV) sector is also impacted by dependence on China. Many Indian companies, including Maruti and Bajaj, now have to import the entire motor assembly, driving up costs.
The government has taken steps to address this issue. The Economic Survey 2024-25 highlighted this dependence as a threat, and the government is encouraging private companies to invest in the sector, though it will take time to see results.
Very Low Production In The US
The situation is similar in the US. There is only one mine, Mountain Pass, which produced 45,000 tonnes in 2024. Still, the US imports over 70% of its REE needs from China. The US once led this field, but China's lower costs and lax environmental rules have left the US behind.
The US also lacks adequate refining facilities and advanced technology. Some new refining plants, like MP Materials in Texas, have started up, but their output will remain far below China's production.
China's Technology Holdback
China has now stopped selling its refining technology to other countries, further slowing their progress. Both the US and India need to increase domestic investment, acquire technology and find better solutions to environmental regulations. Additionally, promoting partnerships and recycling with countries like Australia and Vietnam is crucial.
First Published:
June 05, 2025, 17:50 IST