According to media reports, the Indian government aims to incentivize increased domestic production. It would be the latest in a series of initiatives by the emerging economy to boost its raw material self-sufficiency.
In April, China — the world’s leading producer — imposed restrictions on the export of certain rare earth elements and the magnets made from them, impacting industries worldwide. India was no exception, with representatives of its growing electric vehicle sector raising concerns. In a move to secure short-term supply, India announced in mid-June that it would suspend exports of these raw materials to Japan.
However, the country is also seeking to reduce its import dependence in the long term — particularly in light of strained relations with its neighbor. In what appeared to be a veiled criticism of China, Indian Prime Minister Narendra Modi denounced the use of rare earths as a “weapon” during the BRICS summit in Rio de Janeiro last weekend. Now, India’s government is planning a support program worth the equivalent of $290 million to promote domestic production of rare earth magnets, according to Bloomberg, citing sources familiar with the matter.
Share of domestically sourced materials in magnets to increase gradually
Up to four large companies are expected to benefit from the seven-year program, with the goal of producing around 4,000 tons of magnets. The share of locally mined materials such as neodymium and praseodymium is expected to increase gradually. Bloomberg reports that major players in the mining and manufacturing sectors have already shown interest. The proposal is expected to be submitted to the cabinet for approval soon.
This is not India’s first step toward greater raw material independence. In recent months, the South Asian country has initiated new international partnerships and lifted tariffs on various minerals and scrap materials. Earlier this year, a state-backed initiative was launched to strengthen the entire value chain of critical raw materials — from extraction to recycling — with nearly $2 billion in funding.
The potential to supply industry more robustly from domestic sources is certainly there: according to estimates from the U.S. Geological Survey, India holds the world’s third-largest reserves of rare earths. However, these critical materials are still extracted in only limited quantities. Even more challenging is the lack of processing capacity, as it can take years to bring new mines and facilities online — and much of the technical expertise remains concentrated in China. Without subsidies, producing magnets in India is currently hardly viable, Bloomberg concludes, citing industry insiders.
Photo: iStock/Derek Brumby