India's Rare Earth Export Agreement with Japan

India is re-evaluating its 13-year-old agreement with Japan concerning the export of refined rare earth oxides amid proposals to halt such exports, addressing uncertainties around magnet supply from China and domestic inventory depletion.

Background of the Agreement

• In 2012, a government-to-government (G2G) agreement was signed between Irel (India) Ltd and Toyota Tsusho to supply rare earth oxides to Japan.
• Japan processes these into magnets for exports, including to India.
• India seeks a reciprocal arrangement, asking for magnet supply in return for rare earths, aiming for a technical agreement to share the magnet manufacturing process.

Strategic Partnership

• India has leverage as Japan lacks raw materials for rare earths.
• The Indian government aims to secure 30-40% of magnet needs from Japan.

Production and Demand

• Monazite, containing 55-60% refined rare earth oxide, is India's primary source, prevalent in Andhra Pradesh, Odisha, Kerala, and Tamil Nadu.
• India produced about 5,000 tonnes of monazite in 2023, with plans to increase production capacity to 50 million tonnes annually by 2032.
• Japan's demand for NdFeB magnets is around 7,500 tonnes, while India's consumption is over 50,000 tonnes.

International Context

• India considers negotiating with Japan to access Australia's dysprosium and terbium, crucial heavy rare earth elements.
• China's restrictions since April 4 on rare earth exports impact global automakers and high-tech manufacturers. China accounts for 70% of global mined and 87% of refined rare earth production.