Till this summer, unless you were a nuclear physicist, a Cold War geek or a Scrabble champion, you may not have paid much heed to the seventeen tongue twisters, clubbed as rare earth elements (REE), sitting at the bottom of the periodic table.
Since then, interests in the exotic minerals have exploded globally with Beijing turning them into ammunition for economic statecraft. The world has woken up to the exclusivity and unseen foundational role minerals like neodymium, dysprosium, samarium, lutetium, yttrium (among others) plays in today’s modern global economy -- key raw material for making super-strong, permanent heat-resistant magnets that run every motor in the world. From cars to fighter jets, smart phones, robots, weapons, wind turbines, semiconductors, MRI machines and microwaves. Indian policymaking desperately needs to catch up.
A cascade of billion-dollar deals, diplomatic détentes, government interventions including that of Pentagon, cross border partnerships, private sector investments from companies as diverse as Apple to Daido Steel to European engineering colossus ABB and Honda are fast transforming the once slumbering global critical minerals industry. The US and several of its allies in Europe, Asia and Australia believe such ramp up will act as a bulwark against China’s aggressive efforts to ringfence production and curb exports that threatened to shutter key factories around the world, including auto -- the largest manufacturing sector in most advanced economies – and even brought President Donald Trump to heel on his belligerent trade war and tariff tirades.
The quotidian magnet has suddenly found its way alongside oil, microchips, steel and vaccines in the great geopolitical chess board.
But seven months since the Chinese choke, New Delhi’s Rs 7,300 crore PLI scheme to catalyse the home grown REE industry is still being finalised. Not a single rupee has reached Indian factories. In comparison, just last week, MP Materials, which operates the sole American rare earths mine joined forces with the US Department of War and Saudi state mining company to build a rare earth refinery in the Gulf kingdom. Pentagon that invested a landmark $400 m in the miner will further dial up to fund the new JV despite a 49% stake in lieu of supplies for the country’s manufacturing and defence industries.
In this new resource war, India’s inertia is especially jarring. The US Rare Earth Magnet Security Act is offering powerful tax credits and direct investments, while the Pentagon is underwriting production with hundreds of millions in grants, offtake agreements, and strategic stockpiling to sever Chinese dependence. Canada, Japan and Australia, with direct US government support, are racing to launch new mines, magnet plants, accelerating capacity and supply chain independence. They are extending “friend-shoring” offers to India to build alternative supply chains outside China’s control. Without fast and decisive action, we will be excluded from these newer realignments.
Australia has heavy REs, but not much of a magnet making industry yet. We have the lighter ones. Indian state miner Indian Rare Earths Ltd (IREL) produces 1,300–1,500 tons of neodymium oxide annually, though current government projections aim to scale output ninefold by 2027. But this oxide is of little use without the essential metallization and magnetization capacity as I have argued in an earlier piece. The US has a large market, desperate to stand on its own feet but its own mining sector has whittled away its early technological edge after decades of political apathy. Japan can step in to fill that vacuum. In the last 50 years, outside of China, companies like Hitachi Metals (Protereal), TDK or Shin-Etsu Chemicals have excelled in their RE magnet making prowess. Japan’s domestic industry was itself born out of a crisis with a supply squeeze from China in 2010 after a maritime spat involving the two neighbours -- riding piggyback on our critical minerals by sourcing from Indian Rare Earth Ltd (IREL).
Everyone benefits if the four collaborate to accelerate timelines and reduce risk by incentivising technology transfer and global JVs for magnet making, R&D into advanced grades, newer breakthroughs that do not rely on REs and recycling. Our low cost manufacturing can produce for the home market and for the world. Is there a better way to resuscitate the QUAD alliance in today’s fractured, Trumpian world?
In June our carmakers – amongst the hardest hit by the export controls – were in hyperdrive trying to secure alternate supplies as many of their component vendors were staring at the last leg of inventory. Mid- November, most have tempered down their anguish but reality on ground is starkly different. Since summer, only four export licenses have been approved for magnet volumes representing less than 5% of the 3,600 tons India imported in FY2025. Bottomline: Our manufacturers must still make do with threadbare supplies, risking technological obsolescence. By assembling products that are two decades behind the global curve our export aspirations are on the verge of collapse, as the single most critical technology input is effectively unavailable or priced out. By insisting on a convoluted process requiring self-declarations and compliance verifications, Beijing wants our crippling dependence to continue. Perhaps it makes strategic sense, at least for the short term, to have mandatory domestic offtake procurement of RE magnets for some of our priority sectors like auto and defence. Nothing stops China to lift the ban and flood the market with cheap imports and kill competition, the moment they sense new competition. If they have weaponised trade and undercut tariffs, our pushbacks cannot just be lip service.
Back in 1992, Deng Xiaoping publicly announced his intentions to make REE “the oil of China.” Since then, their iron grip on the entire value chain -- through the templated state backed blend of low-cost production, extraction, cornering of global supplies/mines, lax environmental rules, cheap loans and export limits -- has helped to price out competition and entrench their global dominance. Their indices set the price of the raw materials for the world, making trade opaque and illiquid, curbing miners’ ability to hedge against price volatility in a market that at $5.6 billion in 2024, was 33 times smaller than copper and smallest among all industrial metals as per Goldman Sachs estimates. Australia is breaking free from Chinese hegemony over raw material pricing. We should too.
India’s PLI scheme with a target capacity of up to 6,000 tonnes/year plans to offer has deeper structural problems as well, argues industry players in private. The proposed 15% capex subsidy is insufficient, because government cost estimates wrongly assume Chinese equipment imports, which have become impossible. Equivalent Japanese or German machinery is 40–60% pricier, leaving most Indian industrial groups unwilling to invest without a far higher subsidy. Even the US is giving a $30/kg subsidy to match Chinese pricing. Policy must reflect the true cost to galvanize meaningful domestic production.
Post Cabinet approval, it will also take at least a quarter for application invites, another 15–18 months for capital equipment (mostly non-Chinese, far more expensive), and years of construction. Best case: the 1st Indian-made rare earth magnet is ready around late 2027. Delay or timidity is turning our opportunity into vulnerability as alternatives are being rebuilt around purposeful policymaking. We should be raring to go and secure our place in the next industrial revolution.
Since then, interests in the exotic minerals have exploded globally with Beijing turning them into ammunition for economic statecraft. The world has woken up to the exclusivity and unseen foundational role minerals like neodymium, dysprosium, samarium, lutetium, yttrium (among others) plays in today’s modern global economy -- key raw material for making super-strong, permanent heat-resistant magnets that run every motor in the world. From cars to fighter jets, smart phones, robots, weapons, wind turbines, semiconductors, MRI machines and microwaves. Indian policymaking desperately needs to catch up.
A cascade of billion-dollar deals, diplomatic détentes, government interventions including that of Pentagon, cross border partnerships, private sector investments from companies as diverse as Apple to Daido Steel to European engineering colossus ABB and Honda are fast transforming the once slumbering global critical minerals industry. The US and several of its allies in Europe, Asia and Australia believe such ramp up will act as a bulwark against China’s aggressive efforts to ringfence production and curb exports that threatened to shutter key factories around the world, including auto -- the largest manufacturing sector in most advanced economies – and even brought President Donald Trump to heel on his belligerent trade war and tariff tirades.
The quotidian magnet has suddenly found its way alongside oil, microchips, steel and vaccines in the great geopolitical chess board.
But seven months since the Chinese choke, New Delhi’s Rs 7,300 crore PLI scheme to catalyse the home grown REE industry is still being finalised. Not a single rupee has reached Indian factories. In comparison, just last week, MP Materials, which operates the sole American rare earths mine joined forces with the US Department of War and Saudi state mining company to build a rare earth refinery in the Gulf kingdom. Pentagon that invested a landmark $400 m in the miner will further dial up to fund the new JV despite a 49% stake in lieu of supplies for the country’s manufacturing and defence industries.
In this new resource war, India’s inertia is especially jarring. The US Rare Earth Magnet Security Act is offering powerful tax credits and direct investments, while the Pentagon is underwriting production with hundreds of millions in grants, offtake agreements, and strategic stockpiling to sever Chinese dependence. Canada, Japan and Australia, with direct US government support, are racing to launch new mines, magnet plants, accelerating capacity and supply chain independence. They are extending “friend-shoring” offers to India to build alternative supply chains outside China’s control. Without fast and decisive action, we will be excluded from these newer realignments.
Australia has heavy REs, but not much of a magnet making industry yet. We have the lighter ones. Indian state miner Indian Rare Earths Ltd (IREL) produces 1,300–1,500 tons of neodymium oxide annually, though current government projections aim to scale output ninefold by 2027. But this oxide is of little use without the essential metallization and magnetization capacity as I have argued in an earlier piece. The US has a large market, desperate to stand on its own feet but its own mining sector has whittled away its early technological edge after decades of political apathy. Japan can step in to fill that vacuum. In the last 50 years, outside of China, companies like Hitachi Metals (Protereal), TDK or Shin-Etsu Chemicals have excelled in their RE magnet making prowess. Japan’s domestic industry was itself born out of a crisis with a supply squeeze from China in 2010 after a maritime spat involving the two neighbours -- riding piggyback on our critical minerals by sourcing from Indian Rare Earth Ltd (IREL).
Everyone benefits if the four collaborate to accelerate timelines and reduce risk by incentivising technology transfer and global JVs for magnet making, R&D into advanced grades, newer breakthroughs that do not rely on REs and recycling. Our low cost manufacturing can produce for the home market and for the world. Is there a better way to resuscitate the QUAD alliance in today’s fractured, Trumpian world?
In June our carmakers – amongst the hardest hit by the export controls – were in hyperdrive trying to secure alternate supplies as many of their component vendors were staring at the last leg of inventory. Mid- November, most have tempered down their anguish but reality on ground is starkly different. Since summer, only four export licenses have been approved for magnet volumes representing less than 5% of the 3,600 tons India imported in FY2025. Bottomline: Our manufacturers must still make do with threadbare supplies, risking technological obsolescence. By assembling products that are two decades behind the global curve our export aspirations are on the verge of collapse, as the single most critical technology input is effectively unavailable or priced out. By insisting on a convoluted process requiring self-declarations and compliance verifications, Beijing wants our crippling dependence to continue. Perhaps it makes strategic sense, at least for the short term, to have mandatory domestic offtake procurement of RE magnets for some of our priority sectors like auto and defence. Nothing stops China to lift the ban and flood the market with cheap imports and kill competition, the moment they sense new competition. If they have weaponised trade and undercut tariffs, our pushbacks cannot just be lip service.
Back in 1992, Deng Xiaoping publicly announced his intentions to make REE “the oil of China.” Since then, their iron grip on the entire value chain -- through the templated state backed blend of low-cost production, extraction, cornering of global supplies/mines, lax environmental rules, cheap loans and export limits -- has helped to price out competition and entrench their global dominance. Their indices set the price of the raw materials for the world, making trade opaque and illiquid, curbing miners’ ability to hedge against price volatility in a market that at $5.6 billion in 2024, was 33 times smaller than copper and smallest among all industrial metals as per Goldman Sachs estimates. Australia is breaking free from Chinese hegemony over raw material pricing. We should too.
India’s PLI scheme with a target capacity of up to 6,000 tonnes/year plans to offer has deeper structural problems as well, argues industry players in private. The proposed 15% capex subsidy is insufficient, because government cost estimates wrongly assume Chinese equipment imports, which have become impossible. Equivalent Japanese or German machinery is 40–60% pricier, leaving most Indian industrial groups unwilling to invest without a far higher subsidy. Even the US is giving a $30/kg subsidy to match Chinese pricing. Policy must reflect the true cost to galvanize meaningful domestic production.
Post Cabinet approval, it will also take at least a quarter for application invites, another 15–18 months for capital equipment (mostly non-Chinese, far more expensive), and years of construction. Best case: the 1st Indian-made rare earth magnet is ready around late 2027. Delay or timidity is turning our opportunity into vulnerability as alternatives are being rebuilt around purposeful policymaking. We should be raring to go and secure our place in the next industrial revolution.
Arijit Barman