China's Dominance in Rare Earth Elements and Global Impact
The strategic use of rare earth elements by China in trade negotiations, particularly with the US, may have unintended consequences. China's near half-control of global rare earth reserves is a significant geopolitical tool, but other nations might expand their own mining and refining capacities, diminishing China's influence in the future.
Global Response
- 1. The global market is expected to react to China's strategies by expanding mining initiatives elsewhere.
- 2. Growing demand for rare earth minerals stems from the rise of alternative energy sources and consumer electronics.
India's Position and Strategy
India, owning the third-largest reserves of rare earth minerals, is actively pursuing self-reliance in this sector to avoid dependency on China.
- 1. Initiatives include mining, refining, and recycling of rare earth minerals.
- 2. Fiscal incentives and potential Production-Linked Incentives (PLIs) aim to bolster India's strategic independence.
Economic and Strategic Implications for India
India's rare earth strategy aligns with its ambitions to become a global hub for industries like semiconductors and electronics. Additionally, this effort supports India's climate commitments as it seeks to manage its energy consumption growth.
- 1. Shortages in industries such as automobiles prompt India to negotiate with China, leveraging its trade deficit.
- 2. Exploring partnerships with nations like Australia and Russia, which have significant reserves, could help offset supply constraints.