2 days ago
Indian govt report in 2022 foresaw China rare earth export crisis
As Indian manufacturers are scrambling to deal with supply-chain disruptions caused by China's restrictive policies on the export of rare earth metals, in many of which it has a near monopoly, experts are pointing to an early warning of this — in a 2012 strategy paper prepared by a steering committee headed by the then mines secretary Vishwapati Trivedi after a similar crisis caused after Beijing restricted supplies of the critical materials that are needed in the auto, space and clean energy industries.
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Back then, they added, India felt the heat of Chinese squeeze and on August 9, 2011, the government set up an 11-member steering committee to develop a strategy paper on status and availability of rare earth elements (REE) and energy critical elements (ECE).
The committee was chaired by the mines secretary and co-chaired by chairman of the Centre for Study of Science Technology (C-STEP). Members included senior officials and experts from the Department of Science & Technology (DST), the Geological Survey of India, the Bhabha Atomic Research Centre (BARC), the Department of Atomic Energy, the Defence Research & Development Organization (DRDO) and the chairman of India Rare Earth Ltd.
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The forward of the committee's report titled ''Rare Earths and Energy Critical Elements: a Roadmap and Strategy for India', published in July 2012, said: 'In view of the increased demand of REE and near monopoly of supply from China, there is a need to develop national policies and implementation strategies for ensuring indigenous supply of REE… A Steering Committee was constituted by the ministry of mines with the ultimate intention of preparing a strategy paper for the government, providing short, medium and long term options along with proposals for specific policy & legislative interventions.'
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The report was blunt about Beijing's approach.
'China has been the major supplier of rare earths all over the world. Even though it has only 37% of global RE resources, it has captured the worldwide market to the extent of 97%. The low cost and efficient production process enabled China to monopolize the rare-earth market, forcing rare earth operations around the world to close down. Indian Rare Earths Ltd (IREL), which was once a leader in export of rare earth compounds had to shut down its operation in 2008,' the report added.
'Over the last couple of years China has imposed restrictions and curtailed its export by over 30% citing domestic demands as the reason. This unexpected decline has restarted rare earth operations once again throughout the world,' the report said.
The same thing is happening again. Indian industries are suffering due to shortage of the critical minerals. According to a Reuters report published in Hindustan Times on Wednesday, automobile majors such as Maruti Suzuki have cut near-term production targets because of rare earth shortages.
'Government departments, particularly the ministry of commerce and industry, are holding hectic meetings with industry and other stakeholders to resolve the supply crisis. Government is using diplomatic channels asking Beijing to relax supply curbs for the Indian industries,' one of the people mentioned in the first instance said. The ministries of mines, commerce and external affairs did not respond to an email query on this matter.
China's curbs on exports of rare earth materials have been officially raised through diplomatic channels by India, especially in view of the impact on manufacturers of electric vehicles, people familiar with the matter said. The issue reportedly figured in a meeting between Indian ambassador Pradeep Rawat and China's vice foreign minister Sun Weidong in Beijing on June 5.
'China's move was primarily aimed at the US and the impact on India was collateral damage. We are hopeful that the matter will be resolved soon,' one of the people said.
It is not clear how China's deal with the US —the two countries reached a framework agreement that will now have to be approved by their respective Presidents —will affect this.
The matter is expected to figure in discussions during a visit to India by Sun Weidong, a former Chinese ambassador to New Delhi, beginning on Thursday, the people said. Sun is visiting India to continue discussions with foreign secretary Vikram Misri aimed at normalising bilateral ties following the end of the military face-off in the Ladakh sector of the Line of Actual Control (LAC) last October.
Auto manufacturers affected by the curbs on rare earth exports too have sought to reach out to Chinese authorities but without much success so far, the people said.
Two days after India and China reached an understanding on withdrawing forces from the two remaining 'friction points' on the LAC last October, Prime Minister Narendra Modi and President Xi Jinping met in the Russian city of Kazan and agreed to revive several mechanisms to restore normalcy in ties and to address the long-standing border dispute.
