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Picture Courtesy: INDIANEXPRESS

Context

China's temporary halt on rare earth export controls offers a narrow window for nations to diversify supply chains before Beijing reimposes restrictions and tightens its market dominance.

Read all about: CHINA RESTRICTIONS ON RARE EARTH ELEMENTS l RARE EARTH DISCOVERY IN NORTHEAST INDIA l CHINA'S RARE EARTH EXPORT CURBS l INDIA TO BOOST RARE EARTH MAGNET l CRITICAL MINERAL INDEPENDENCE l INDIA'S NEW MINERAL MINING POLICY

What is Rare Earth Elements (REEs)?

They are a group of 17 metallic elements, including the 15 lanthanides, scandium, and yttrium.

Despite their name, they are relatively abundant in the Earth's crust. However, their extraction and processing are complex, expensive, and environmentally intensive.

They are critical for modern technology, powering everything from smartphones, electric vehicles (EVs), and wind turbines to advanced defence systems like guided missiles and radar.

China's Dominance in the Global REE Supply Chain

China's dominance of the REE value chain, built on low labor costs and lax environmental rules, poses a major global economic and national security challenge.

Mining Supremacy: China accounts for about 70% of the world's rare earth mining, producing 240,000 metric tons in 2023. (Source: U.S. Geological Survey).

Processing and Refining: China controls an estimated 90% of the global rare earth processing and refining capacity, including a near-total monopoly on Heavy REEs (HREEs) like dysprosium and terbium.

Permanent Magnet Production: China manufactures over 92% of the world's rare earth permanent magnets, which are essential for EVs and renewable energy technologies. (Source: BBC)

Case Study: The 2010 Weaponization of Supply

In 2010, following a territorial dispute, China halted REE exports to Japan. This act demonstrated China's willingness to use its supply chain dominance as a tool of economic statecraft.

It caused global REE prices to surge and served as a wake-up call for nations to diversify their sources and reduce dependence on China.

Global Strategies to Counter China's Dominance

Strategy	Details
Diversifying Mining Sources	USA: The Mountain Pass mine in California has restarted and scaled up operations. Emerging Producers: New projects are being explored in Brazil, Vietnam, and several African nations.
Building Non-Chinese Processing Capacity	Lynas Rare Earths is building a new processing facility in Kalgoorlie, Australia, and another in the USA. Canada: The Saskatchewan Research Council has opened a rare earth processing facility, the first of its kind in North America.
Recycling and Urban Mining	Currently, the global recycling rate for REEs is extremely low, at less than 1%. (Source: European Commission). Focus is on recovering REEs from e-waste (old electronics) and industrial scrap. Innovations like "magnet-to-magnet" recycling are being developed to improve efficiency and reduce waste. In India, the Critical Mineral Recycling Incentive Scheme (CMRIS) approved in September 2025.
Substitution and R&D	Research into materials that can replace REEs in applications like magnets and batteries. Examples include heavy rare earth-free magnets developed in Japan and research into synchronous reluctance motors that use fewer or no rare earths.
Strategic Stockpiling	Countries like the USA, Japan, and the EU are creating strategic reserves of critical minerals to mitigate short-term supply disruptions. The EU's Critical Raw Materials Act (CRMA) proposes building emergency stockpiles.

India's Pursuit of REE Self-Reliance

India holds the world's third-largest rare earth reserves (6.9 million tonnes) but remains a net importer, largely dependent on China.

Challenges for India

Technological Gaps: India lacks the advanced technology for processing rare earth oxides into high-purity metals and fabricating them into high-performance magnets.
High Capital Investment: Setting up the entire value chain requires long-term investment.
Environmental Concerns: REE processing involves hazardous chemicals and radioactive by-products (like thorium in monazite), requiring stringent environmental safeguards.

Government Initiatives

Policy Reforms: The offshore area mineral auction rules were amended in 2024 to allow private sector participation in mining, including for atomic minerals like monazite, which contains REEs.

IREL (India) Limited: As a PSU, IREL is the primary entity involved in mining and processing REEs. It produces mixed rare earth chloride and is working to enhance its capacity to separate individual high-purity REEs.

Khanij Bidesh India Ltd. (KABIL): A joint venture created to acquire critical mineral assets overseas. In 2024, KABIL signed an agreement with Argentina for lithium exploration and is seeking similar partnerships for other minerals, including cobalt and rare earths.

Research and Development: Government is funding R&D in areas like magnet development and alternative technologies to reduce REE consumption through schemes like the National Critical Mineral Mission (NCMM) and a Production Linked Incentive (PLI) Scheme for Rare Earth Magnets.

International Cooperation: A United Front

Recognizing that no single country can counter China's dominance alone, several international alliances have been formed.

Minerals Security Partnership (MSP): A US-led alliance of 14 countries plus the EU, aimed at catalysing public and private investment in critical mineral supply chains. India joined the MSP, gaining access to a global network for collaboration.

Quadrilateral Security Dialogue (Quad): The Quad (India, USA, Japan, Australia) has established a Critical and Emerging Technology Working Group which focuses on securing supply chains for critical minerals, including REEs.

Conclusion

Reducing dependence on China for rare earth elements requires a multi-pronged strategy that includes diversification of sources, technological innovation in processing and recycling, and robust international alliances.

Source: INDIANEXPRESS

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PRACTICE QUESTION

Q. China’s dominance in the rare earths value chain poses strategic risks. Discuss how India can reduce dependency and build self-reliance. 250 words

Frequently Asked Questions (FAQs)

China dominates the global rare earth supply chain, controlling about 70% of mining and nearly 90% of refining. This makes the world highly vulnerable to supply disruptions for critical technologies (EVs, wind turbines, defense, electronics) and allows Beijing geopolitical leverage.

The key hurdle is midstream (processing and refining) capacity. Though rare earth deposits are global, establishing environmentally sound and cost-effective processing plants demands major investment, technical skill, and time, largely due to China's price-depressing market dominance.

They are relatively common in the Earth's crust, making their name a misnomer. However, cost-effective mining and processing is challenging due to the need for high concentrations and complexity.