India Stops Rare Earth Exports to Focus on Its Own Needs

Why in the News?

1. The Government of India has directed the state-run company IREL to suspend its long-standing agreement with Japan for the export of rare earth elements.
2. This step has been taken to ensure that rare earth minerals are first used to meet India’s domestic needs, especially in critical sectors like defence, electronics, and clean energy.
3. A key motive behind the move is to reduce India’s dependence on China, which currently dominates the global rare earth processing industry.
4. This decision is also part of a broader strategy to strengthen India’s control over its critical mineral resources and ensure long-term national security.

IREL (Indian Rare Earths Limited): IREL (India) Limited is a government-owned company under the Department of Atomic Energy that mines and processes rare earth minerals and beach sand minerals in India. It has several units in states like Kerala, Tamil Nadu, and Odisha, and is key to India’s rare earth production. The company plays an important role in India’s plan to reduce dependence on China for critical minerals and support the clean energy and defence sectors. Rare Earth Elements: They are a group of 17 metals. They are critical for advanced technologies like electronics, electric vehicles, wind turbines, and defence systems. These elements are strategically significant because global supply chains are highly dependent on China for their processing. This leads to a rising geopolitical and economic concern for countries like India.

Key Highlights of the News

1. Background of the India-Japan Rare Earth Agreement:
   1. IREL supplies rare earths to Toyota Rare Earths India, a subsidiary of Japan’s Toyota Tsusho.
   2. This unit processes the rare earths in India, after which the refined materials are exported to Japan.
   3. These are then used to make magnets which can be used in electric vehicles, wind turbines, and other advanced technologies.
2. Significant Export Volume in 2024:
   1. In the year 2024 alone, over 1000 metric tonnes of rare earth materials were exported from India to Japan.
   2. This shows the scale of the trade and the role India played as a supplier.
3. China’s Global Dominance in Rare Earths:
   1. Globally, China processes nearly 90% of rare earth elements.
   2. This gives it a strategic advantage in high-tech manufacturing and weapon systems.
   3. India’s decision is aimed at breaking this monopoly and developing its own processing capacity.
4. Domestic Capacity Limitations:
   1. IREL currently lacks advanced infrastructure for rare earth processing.
   2. It is still awaiting statutory clearances at four of its mines.
   3. This indicates that delays and the lack of necessary approvals have become major hurdles in expanding the domestic production capacity of rare earth metals.
5. Policy and Strategic Shift:
   1. The move reflects India’s growing focus on national security in mineral resource management.
   2. The government is reviewing export policies related to critical minerals, especially those required in future-ready technologies like EVs, semiconductors, and defence systems.

Implications for India

1. Strengthening Domestic Industries:
   1. By retaining rare earth resources within the country, India can support its domestic industries that rely on these critical materials.
   2. Sectors like renewable energy, electronics, and electric mobility will benefit from a steady and secure supply of raw materials.
2. Strategic Reduction in China Dependence:
   1. Developing domestic processing capacities will help India reduce its heavy reliance on China.
   2. This will enhance India’s strategic autonomy in critical sectors.
3. Push Towards a Self-Reliant Economy:
   1. The move supports the vision of 'Atmanirbhar Bharat' by encouraging indigenous capabilities in the mining and processing of rare earths.
   2. It also helps to reduce the dependency on external sources for high-value materials.
4. Impact on Bilateral Relations:
   1. Suspending the agreement with Japan may lead to temporary diplomatic or trade-related friction.
   2. However, the decision also presents an opportunity to explore deeper forms of cooperation, such as joint ventures in rare earth processing.
   3. It can further lead to technology-sharing agreements, which would be beneficial for both India and Japan in the long term.
5. Strengthening India's Mineral Security Strategy:
   1. The decision is part of India’s larger effort to build a secure and sustainable supply chain for critical minerals.
   2. It aligns with global trends where nations are reassessing their dependencies and building internal resilience.

Challenges and Way Forward

Challenges	Way Forward
Lack of Refining and Processing Capacity	India must invest in setting up rare earth mineral processing plants and related industries like magnet production. Public-private partnerships can help bridge the technological and investment gaps.
Dependence on Foreign Technology	Strategic collaborations with technologically advanced nations such as Japan can help in the transfer of know-how. It can also help in building domestic capacity in processing and value addition.
Delays in Policy Implementation	The government needs to streamline its decision-making process and expedite clearances for rare earth projects. A time-bound roadmap for critical mineral development should be implemented.
Vulnerabilities in Global Supply Chains	India should diversify its sources of rare earth supply and build strategic mineral reserves. This will act as a safeguard against international disruptions.
Balancing National Interest with Diplomatic Ties	India should carefully balance its domestic needs while maintaining strong diplomatic and economic relations. Transparent communication and long-term cooperative frameworks can mitigate negative fallout from such policy shifts.

 

Ensure IAS Mains Question: Q. Discuss the strategic significance of rare earth elements for India. In this context, critically examine the role of IREL (India) Limited in strengthening India’s rare earth value chain and reducing external dependencies. (150 words)

 

Ensure IAS Prelims Question: Q. Consider the following statements about IREL (India) Limited: IREL operates under the Ministry of Mines. It is involved in the mining and processing of rare earth and beach sand minerals. Which of the statements given above is/are correct? 1 only 2 only Both 1 and 2 Neither 1 nor 2 Answer: b Explanation: Statement 1 is incorrect: IREL operates under the Department of Atomic Energy, not the Ministry of Mines. Statement 2 is correct: IREL is engaged in the mining and processing of rare earth elements and beach sand minerals like ilmenite, rutile, zircon, and garnet.

 

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