Introduction

The Union Cabinet of India has approved a ₹7,280-crore scheme to manufacture rare earth permanent magnets domestically, aimed at bolstering the electric mobility and electronics industries. This initiative involves the establishment of integrated manufacturing facilities for Rare Earth Permanent Magnets (REPM), converting rare earth oxides to metals, metals to alloys, and alloys to finished REPMs.

Royalty Rate Rationalization

• The Cabinet has adjusted royalty rates for several minerals: 
  1. Graphite:
     • 4% royalty for less than 80% fixed carbon content.
     • 2% royalty for 80% or more fixed carbon content.
  2. Caesium and Rubidium: 2% royalty on the average sale price.
  3. Zirconium: 1% royalty.

Global Context and China’s Dominance

China’s dominant position in rare earth elements (REEs) is due to its control over 90% of global REE processing and 70% of production, despite having only 30% of the global reserves. Recent export restrictions by China have impacted global supply chains, particularly affecting the automobile and electric vehicle sectors.

India’s Strategic Response

• National Critical Mineral Mission: Launched with a focus on exploration, processing, and recycling of critical minerals such as lithium, cobalt, and rare earths.
• Investment and Collaboration:
  1. India seeks to secure critical minerals through international partnerships.
  2. Auctioning of new mining blocks to encourage private sector participation.
• Infrastructure and Challenges:
  1. Current limitations include lack of refining infrastructure and skilled labor.
  2. Long gestation period for domestic manufacturing.

Lessons from Japan

India's strategy mirrors Japan's response to a similar crisis in 2010, where swift actions reduced its dependency on China for REEs from 90% to 60% over 14 years. Japan's measures included technology development, recycling expansion, and investment in foreign mines.

Conclusion

India's success in rare earth independence hinges on accelerated efforts to diversify suppliers, build domestic capabilities, and invest overseas. With global scrutiny on China's dominance, countries are actively seeking alternative supply chains, and India is poised to reposition itself in this critical sector.