India’s Rare Earth Conundrum: Understanding the Complexities of a Critical Resource
In the world of high-tech and defence sectors, a group of 17 chemically similar metals known as rare-earth elements (REEs) play a vital role. Despite their name, these elements are not geologically rare, with cerium being more abundant than copper. However, they are rarely found in concentrated, mineable form, making their extraction a complex and energy-intensive process. The supply of REEs is highly constrained, and their demand is driven by the tech, electric vehicle (EV), and defence industries.
The REE market is characterized by a unique set of challenges. Unlike copper or iron, REEs are not traded individually in global markets. Their extraction requires separation from mixed ores, which is a costly and complex process. The demand for certain REEs, such as cerium and lanthanum, is declining due to the increasing adoption of EVs, while others like neodymium, dysprosium, praseodymium, and terbium are essential for permanent magnets used in EV motors, offshore wind turbines, robotics, and military hardware.
**China's Stranglehold on the Global REE Chain**
China dominates the global REE market, mining 69% of the world's rare earth ores, refining 85% of light REEs, and controlling 92% of global permanent magnet manufacturing capacity. The United States, Myanmar, and Australia lag significantly behind in REE production. China's dominance extends beyond extraction, as it refines, processes, and manufactures finished REE products, such as magnets and electric motors. The country no longer exports raw REEs, instead exporting high-value end products like magnets, motors, and EVs.
China's dominance began in the 1990s, when it acquired global assets and pressured Japan to relocate magnet production to China. Today, China dominates every step of the REE supply chain, from mining to exporting finished goods. The country produces 85% of the purified light REEs used worldwide and 100% of the heavy REEs. China's advanced sulfuric acid roasting technology and imports of raw REE-rich ores from countries like Myanmar and Madagascar have enabled it to maintain its advantage.
**Global Attempts to Re-enter the Market**
Other countries are attempting to re-enter the REE market. France's Solvay announced plans to restart REE purification in 2022, while the United States reopened the Mountain Pass mine in California with defence contracts. However, a key challenge is that China can manipulate rare earth prices, making competing projects economically unviable and financially risky.
To reduce demand, eco-design and substitution of rare earth magnets in non-critical applications can be effective. Building competitive players across the value chain can also help dilute China's control. The European Union's 2024 Critical Raw Material Act encourages local refining and sustainable mining.
**India's Rare Earth Situation**
India holds 6.9 million metric tons of REE reserves, mostly in monazite-rich beach sands. However, production remains low, and the country imports 93% of its permanent magnets, mostly from China. Domestic refining and magnet manufacturing capacity remains severely underdeveloped. The Indian government has conducted inter-ministerial meetings to secure the domestic supply chain of REEs, which are critical for EVs, electronics, renewable energy infrastructure, and national defence systems.
**Myanmar: A Strategic Rare Earth Partner for India**
Myanmar is the world's third-largest REE producer, especially rich in heavy rare earths like dysprosium and terbium. The country's Kachin State supplies approximately 40% of China's heavy REE feedstock, making it a strategic region for India. The India-Myanmar collaboration offers significant advantages, including geographic proximity, cultural ties, and access to maritime routes through the Bay of Bengal.
India can take immediate steps by strengthening diplomatic ties with both Myanmar's ruling junta and key rebel groups, such as the Kachin Independence Organization (KIO). The country can expedite the Kaladan Multi-Modal Transit Transport Project (KMTTP) infrastructure for direct access to REE zones and launch a new Production-Linked Incentive (PLI) scheme for domestic magnet manufacturers working with Myanmar inputs.
**The Way Forward**
India needs to collaborate with the United States, Japan, and Australia to co-finance secure REE projects in Myanmar. The country can reinforce its regional leverage in Southeast Asia by asserting leadership and counterbalancing China's influence and control. By strengthening domestic REE production and forging smart, ethical partnerships with Myanmar, India can secure strategic materials, reduce Chinese dependency, and enhance its position in the global rare earth race.
In conclusion, the rare earth conundrum is a complex issue that requires a multifaceted approach. Understanding the intricacies of the REE market, China's dominance, and the challenges faced by other countries is crucial for developing effective strategies to reduce dependence on Chinese supplies. India's collaboration with Myanmar and other countries can help create a more diversified and secure REE supply chain, ultimately benefiting the global economy and defence industries.In the world of high-tech and defence sectors, a group of 17 chemically similar metals known as rare-earth elements (REEs) play a vital role. Despite their name, these elements are not geologically rare, with cerium being more abundant than copper. However, they are rarely found in concentrated, mineable form, making their extraction a complex and energy-intensive process. The supply of REEs is highly constrained, and their demand is driven by the tech, electric vehicle (EV), and defence industries.
The REE market is characterized by a unique set of challenges. Unlike copper or iron, REEs are not traded individually in global markets. Their extraction requires separation from mixed ores, which is a costly and complex process. The demand for certain REEs, such as cerium and lanthanum, is declining due to the increasing adoption of EVs, while others like neodymium, dysprosium, praseodymium, and terbium are essential for permanent magnets used in EV motors, offshore wind turbines, robotics, and military hardware.
**China's Stranglehold on the Global REE Chain**
China dominates the global REE market, mining 69% of the world's rare earth ores, refining 85% of light REEs, and controlling 92% of global permanent magnet manufacturing capacity. The United States, Myanmar, and Australia lag significantly behind in REE production. China's dominance extends beyond extraction, as it refines, processes, and manufactures finished REE products, such as magnets and electric motors. The country no longer exports raw REEs, instead exporting high-value end products like magnets, motors, and EVs.
China's dominance began in the 1990s, when it acquired global assets and pressured Japan to relocate magnet production to China. Today, China dominates every step of the REE supply chain, from mining to exporting finished goods. The country produces 85% of the purified light REEs used worldwide and 100% of the heavy REEs. China's advanced sulfuric acid roasting technology and imports of raw REE-rich ores from countries like Myanmar and Madagascar have enabled it to maintain its advantage.
**Global Attempts to Re-enter the Market**
Other countries are attempting to re-enter the REE market. France's Solvay announced plans to restart REE purification in 2022, while the United States reopened the Mountain Pass mine in California with defence contracts. However, a key challenge is that China can manipulate rare earth prices, making competing projects economically unviable and financially risky.
To reduce demand, eco-design and substitution of rare earth magnets in non-critical applications can be effective. Building competitive players across the value chain can also help dilute China's control. The European Union's 2024 Critical Raw Material Act encourages local refining and sustainable mining.
**India's Rare Earth Situation**
India holds 6.9 million metric tons of REE reserves, mostly in monazite-rich beach sands. However, production remains low, and the country imports 93% of its permanent magnets, mostly from China. Domestic refining and magnet manufacturing capacity remains severely underdeveloped. The Indian government has conducted inter-ministerial meetings to secure the domestic supply chain of REEs, which are critical for EVs, electronics, renewable energy infrastructure, and national defence systems.
**Myanmar: A Strategic Rare Earth Partner for India**
Myanmar is the world's third-largest REE producer, especially rich in heavy rare earths like dysprosium and terbium. The country's Kachin State supplies approximately 40% of China's heavy REE feedstock, making it a strategic region for India. The India-Myanmar collaboration offers significant advantages, including geographic proximity, cultural ties, and access to maritime routes through the Bay of Bengal.
India can take immediate steps by strengthening diplomatic ties with both Myanmar's ruling junta and key rebel groups, such as the Kachin Independence Organization (KIO). The country can expedite the Kaladan Multi-Modal Transit Transport Project (KMTTP) infrastructure for direct access to REE zones and launch a new Production-Linked Incentive (PLI) scheme for domestic magnet manufacturers working with Myanmar inputs.
**The Way Forward**
India needs to collaborate with the United States, Japan, and Australia to co-finance secure REE projects in Myanmar. The country can reinforce its regional leverage in Southeast Asia by asserting leadership and counterbalancing China's influence and control. By strengthening domestic REE production and forging smart, ethical partnerships with Myanmar, India can secure strategic materials, reduce Chinese dependency, and enhance its position in the global rare earth race.
In conclusion, the rare earth conundrum is a complex issue that requires a multifaceted approach. Understanding the intricacies of the REE market, China's dominance, and the challenges faced by other countries is crucial for developing effective strategies to reduce dependence on Chinese supplies. India's collaboration with Myanmar and other countries can help create a more diversified and secure REE supply chain, ultimately benefiting the global economy and defence industries.
