India has approved a Rs 7,280 crore scheme to build an integrated, 6,000 metric tonnes per annum (MTPA) rare-earth permanent magnet manufacturing facility.
About Rare Earth Elements (REEs)
- Definition: REEs are a set of metallic elements in the periodic table that consist of 17 elements found in the Earth’s crust- the 15 lanthanides from lanthanum to lutetium, and scandium and yttrium.
- Reason for Rarity: They are not actually rare in occurrence, but rare in economically viable, concentrated deposits and are difficult to separate due to their similar chemical properties.
Significance of REEs
- Criticality over Quantity: Rare earth elements (REEs) are not significant in total volume, but a few critical elements are indispensable inputs for clean energy and advanced technologies.
- Enablers of the Green Transition: REEs underpin the global green transition by enabling high-efficiency electrification, renewable energy generation, and the new energy economy.
- Strategic Applications: They are irreplaceable for manufacturing electric vehicle (EV) motors, wind turbine generators, battery systems, defence equipment, and advanced electronics.
The Environmental Irony of REEs
- Green Technologies, Dirty Extraction: While essential for electric vehicles and renewable energy, REE extraction and processing generate toxic waste, groundwater contamination, and radiation risks.
The Core Dilemma: This creates a paradox of pursuing environmental sustainability through resource-intensive and environmentally damaging mining, highlighting the need for sustainable extraction, recycling, and a circular economy.
The Bottleneck — China’s Dominance
- Supply Chain Choke Point: The principal bottleneck lies in high-performance permanent magnets, especially neodymium-iron-boron (NdFeB) magnets, which are critical for electric vehicle (EV) motors and wind turbines.
- Shock Transmission: When supply disruptions occur, it is these strategic magnet inputs, rather than all REEs, that transmit economic shocks across economies.
- Limits of Mining Expansion: Merely opening new rare-earth mines does not ensure supply security, as countries often remain dependent on others for refining, separation, and magnet manufacturing.
- The China Factor: China dominates the REE value chain, controlling 80–90% of global refining and processing capacity.
- China also leads in the most critical downstream stages—separation technologies and high-value permanent magnet manufacturing—giving it decisive supply-chain leverage, despite mining activity in the US and Australia.
India’s 2025 Policy Shift
- From Mining to Manufacturing: In late-2025, India recalibrated its critical minerals strategy by prioritising magnet manufacturing over a narrow focus on mining.
- Integrated Magnet Manufacturing Scheme: The government launched a ₹7,280-crore scheme to build an integrated ecosystem capable of producing 6,000 tonnes of sintered rare-earth permanent magnets annually.
- Reducing Import Dependence: The initiative aims to cut import reliance for high-performance magnets, a key vulnerability in India’s clean-energy and electronics supply chains.
- Downstream Industrial Deepening: The policy is expected to catalyse downstream manufacturing in electric vehicles, wind energy components, and advanced electronics.
Challenges Faced by India
- Monazite–Nuclear Linkages: India’s REEs are largely found in beach sand deposits alongside thorium and other nuclear-linked minerals, placing the sector under a stringent governance regime requiring coordination among the Department of Atomic Energy (DAE), Indian Rare Earths Limited (IREL), regulators, and local communities.
- Environmental and Social Governance: Waste management, radiation safety, and community engagement must be treated as core industrial inputs, not peripheral compliance issues.
- Lab-to-Land Gap: While the National Critical Mineral Mission has expanded exploration projects up to 2031, India must convert geological knowledge into commercial separation and manufacturing capacity, requiring regulatory clarity, reliable public financing, and credible enforcement.
- Market Viability Challenge: Scaling the midstream segment demands making magnet manufacturing bankable through long-term offtake agreements with EV and electronics firms, alongside process innovation to reduce dependence on the most supply-constrained elements.
Conclusion
The next phase of the green transition will reward countries that can scale supply chains, avoid undermining green compliance and distribute rather than concentrate risk. India should turn policy and intent into industrial capacity with environmental credibility.
25 Dec 2025
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