The development assumes significance given that these three mining majors are key players in the global effort to challenge Chinese dominance in the rare earths supply chain.
One of the three people said that the Union ministry of heavy industries through state-run Bharat Heavy Electricals Ltd (Bhel) has reached out to these global companies to gauge the interest of suppliers, and they have shown interest in signing long-term contracts with applicants under the scheme.
Mint earlier reported that the government is finalizing an incentive scheme to boost local production of rare earth magnets, and domestic entities like Bharat Forge, Mahindra and JSW are likely to bid under the scheme.
“Several global companies have offered to supply rare earth oxides. Bhel has reached out to global majors. Lynas Rare Earths, an Australian mining company, Iluka, also from Australia and Rainbow of UK are among the top players to have shown interest in supplying rare earth oxides,” the first person said.
Another person stated that these companies have been supplying magnet production facilities globally and are eager to supply through long-term contracts with Indian magnet manufacturers.
Iluka Resources’ website shows that rare earth-bearing minerals are routinely produced through Iluka’s mineral sands processing activities. Currently, Iluka has 1 million tonnes of stockpiled concentrate, rich in both light and heavy rare earths, at Eneabba in Western Australia, it said.
Incentives for firms
Lynas Rare Earths recently announced that it would increase the processing capacity of heavy rare earths at its Malaysian refinery. The company, which is the only supplier of both light and heavy rare earth oxides outside China, announced that it will construct a new separation facility at its plant. It will process ore from its Mount Weld mine in Australia, as well as other sources in Malaysia.
The UK’s Rainbow is working on two major projects: the Phalaborwa Project in South Africa and the earlier-stage Uberaba Project in Brazil. Both projects involve the recovery of rare earths from phosphogypsum stacks, which are by-products of phosphoric acid production. It also has a majority interest in the high-grade Gakara Project in Burundi, East Africa, which is currently on care and maintenance.
Queries mailed to the Union ministry of heavy industries, Lynas Rare Earths, Iluka Resources and Rainbow Rare Earths remained unanswered till press time.
The third person said that under the planned rare earth manufacturing scheme, about 2,000 tonnes of rare earth oxide would be required, which in turn would be used for manufacturing 6,000 tonnes of magnets annually.
A total of five players would be supported under the scheme. Companies interested in manufacturing magnets, used in various strategic sectors, need to invest at least ₹200 crore, and incentives are likely to be equal to 15% of the total investment.
Incentives will be available for companies that provide end-to-end magnet manufacturing capability, which means those manufacturers that source rare earths and process them into magnets will be eligible for incentives.
Refining rare earths
Rare earth magnets are the strongest type of permanent magnets, composed of alloys of rare earth elements, such as neodymium-iron-boron (NdFeB) and samarium-cobalt (SmCo). These powerful magnets are crucial for compact, energy-efficient devices such as electric vehicle motors, wind turbines, and a variety of electronics, defence, and energy transition applications.
Currently, the state-owned Indian Rare Earths Ltd (IREL) is the sole refiner of rare earths in India, with a capacity to produce approximately 1,500 tonnes of rare earth magnets annually. The company is exploring the expansion of its capacity.
“As domestic refining and processing facilities would need time to develop, imports would play the key role in the initial phase of the scheme,” the second person said.
Experts suggest that such a move would help mitigate the risks associated with the supply chain. Amrit Lal Meena, former secretary to the coal ministry, told Mint: “It is extremely important to derisk the supply chain and look for new sources of rare earth elements, oxides, while looking at setting up domestic capacities. India has already been considering the acquisition of assets abroad. Efforts to source oxides for manufacturing magnets and secure our own assets would go a long way in achieving self-reliance. Otherwise, import dependence on one or a few countries may turn out to be disruptive.”
Managing supply
India’s push for making a robust rare earth permanent magnet production ecosystem needs a two-pronged approach, along with some guardrails, said Mahesh Deodhar, head of the Centre for Sustainable Energy and Mobility at the Pune International Centre. “The two-pronged approach needs to have incentives to make in India, along with restrictions on imports using tools such as anti-dumping duties or higher import duties. A similar approach has been adopted to promote solar PV cell and panel manufacturing in India. While incentives have been provided through PLI scheme, the cheap panel imports have also been restricted by applying the ALMM (Approved list of Make and Models) for imported panels,” he said.
But, both these policy drivers need to be time-bound, to prevent an entirely protectionist approach, which could hinder the global competitiveness of Indian players, he added.
“IREL is the largest player currently in India, which refines and processes rare earth elements and produces oxides. Although India has significant reserves of rare earth elements, refining and processing them is the key. Further, India’s rare earths are largely light rare earths. Manufacturing magnets also requires heavy rare earths, and tie-ups with global companies like Lynas would help in securing heavy rare earth supplies,” said Siddharth Nautiyal, head of strategy and new initiatives at Lohum.
Typically, the rare earth oxides comprise about 30% of the overall weight of a permanent magnet. And out of the rare earth composition in magnets, around 90% is light rare earths and the rest is heavy rare earths. Although small in quantum, heavy rare earth plays a critical role, he said.
Breaking the monopoly
Rare earth elements, although abundant, are not easily found in large, mineable deposits and are known for their unique magnetic and luminescent properties. They are widely used in automotive motors and LED lights. China dominates the refining and supply of 90% of heavy rare earths or those with higher atomic weight, according to estimates by the International Energy Agency.
China began restricting exports of rare earths in April, following a deterioration in trade relations with the US due to tariffs imposed by President Donald Trump’s administration.
China’s export curbs prompted the formation of new international alliances. India has joined hands with its Quadrilateral Security Dialogue (QUAD) partners, the US, Japan, and Australia, to form a new alliance aimed at boosting the supply of critical minerals and rare earths in the global economy and loosening China’s chokehold on these commodities.
India has also highlighted the disruption of global supply chains. Prime Minister Narendra Modi, at the 17th Brics summit in July, emphasized making critical mineral supply chains reliable and ensuring that no country uses these resources for its own selfish gains or as a weapon against others.
India is also working on increasing its rare earth refining capacity. The Union ministry of mines is preparing a scheme with an allocation of about ₹1,500 crore to support rare earth refining in the country.
India has about 7.23 mt of rare earth elements reserves in the coastal beaches, red sand and inland alluvium in parts of Andhra Pradesh, Odisha, Tamil Nadu, Kerala, West Bengal, Jharkhand, Gujarat and Maharashtra, while another 1.29 mt is in parts of Gujarat and Rajasthan, the government informed Parliament on 23 July. But state-run IREL is the only refiner of the critical minerals in the country.
In 2022, India’s domestic consumption of NdFeB (Neodymium) magnets, also known as permanent magnets, was 1,700 tonnes, with the market valued at ₹1,245 crore and average prices ranging from ₹4,186 to ₹4,605 per kilogram. By 2030, this demand is projected to rise exponentially to 7,154 tonnes, with the market value reaching ₹7,295 crore.
