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India's leading rare earths producer IREL has no full-time chairperson during supply crisis
Mumbai: IREL (India) Ltd, a public sector enterprise that produces rare earth elements, does not have a full-time chairperson and managing director (CMD) since December 2024 when Deependra Singh vacated the post after nearly a decade at the helm.
The vacancy comes to light at a time when Indian manufacturers, especially makers of automobiles, fear production disruptions due to China restricting the export of rare earth elements. The Indian government and industry are exploring alternatives to reduce reliance on China for these elements that go into several electronic components, particularly motors that drive electric vehicles.
Currently, the position of CMD is shown as vacant on the website of IREL. S.B. Mohanty, the company's director of finance, has taken the interim charge of the CMD office.
Also read: Mint Long Story: India's EV dreams caught between rare earth and a hard place
The Miniratna firm had put out an advertisement inviting applications for the CMD position in February.
'Indian public sector enterprises are tardy when it comes to filling director and KMP (key managerial personnel) roles as they wait for approval from their parent ministries," said Shriram Subramanian, a corporate governance export and the managing director of proxy advisory firm InGovern.
'This needs to be resolved by a directive from the Prime Minister's Office to all ministries as it sends a wrong signal that the PSEs (public sector enterprises) don't have planned succession planning and is a disservice to the companies and their investors," he said.
Emails and calls to IREL requesting comment did not elicit a response.
The longstanding vacancy of the top position at IREL is another indication of India perhaps missing a trick by not capitalizing on its early lead in this sector. In 2010, India had little over 2% share of global output of rare earths, second only to China's overwhelming 95% share. But uncompetitive costs of Indian producers in the face of the Chinese juggernaut smothered the fledgling domestic rare earths industry.
IREL had a Rare Earths Division at Aluva in Kerala which it had to shut in 2004 due to the lack of market competitiveness.
'Despite the importance of rare earths in meeting the zero emission target by 2070 and IREL's capability in making refined individual rare earths available for the downstream industry, the rare earth ecosystem is yet to take off in India," IREL said in its FY24 annual report, adding that the domestic market for its products was nearly non-existent.
Also read: Top power authority mulls sops for critical components as China curbs rare earth supply
A slower-than-expected adoption of electric vehicles globally has led to rare earths supply outstripping demand, the firm said in the annual report. This eroded the prices of rare earths.
'Despite this adverse situation, IREL has successfully made available rare earth products with quality and price on par with the leading supplying country," the company said.
Originally called Indian Rare Earths Ltd, the firm was set up in 1950 under the administration of independent India's first prime minister Jawaharlal Nehru to produce thorium to support India's nuclear power needs. Over the years, the firm diversified to produce other rare earth elements, including a recently inaugurated rare earth magnet plant at Vishakhapatnam.
The company had warned as early as 2010 that China's consolidation of the global rare earths supply chain could be an issue in the future for industries like smartphones, solar cells and new technology vehicles. This was after China paused supplies of rare earths to Japan following a disagreement over oceanic boundaries, prompting the island nation to strike a deal with IREL for the rare earths, Mint reported in November 2010.
Also read: Automakers urge Indian govt for diplomatic outreach to China for rare earths
That agreement is still in force. Last week, the Indian government asked IREL to suspend the 13-year-old agreement with Japan and to safeguard supplies for domestic needs, Reuters reported, citing two unnamed sources.
The company reported a profit of ₹1,012 crore for FY24. Its revenue for the year was ₹2,104 crore.
