Mains Practice Questions

Introduction :

India holds an estimated 6.9 million tonnes of rare earth oxide reserves, the third largest globally, yet contributes less than 1% to global production. This mismatch between reserves and output highlights the need to strengthen India’s REE ecosystem for achieving technological sovereignty and economic security.

Body :

Strategic Importance of Rare Earth Minerals

• Crucial for India’s Clean Energy Transition and Climate Goals: Rare earth elements (REEs) are indispensable for clean energy technologies, including permanent magnets used in wind turbines, catalysts in solar cells, and batteries in electric vehicles (EVs).
  • The demand for rare earth magnets in sectors like wind energy and EVs is expected to nearly double by 2030, aligning with India’s net-zero emission target (2070).
• Essential for National Defence and Strategic Autonomy: Rare earth metals are critical for advanced defence technologies such as missile guidance systems, communication devices, radar, and electronic warfare equipment.
  • India currently relies heavily on imports, primarily from China, creating vulnerabilities.
• Boosting Economic Growth and Job Creation: India possesses the third-largest rare earth reserves globally (about 6.9 million tonnes), primarily in coastal regions (Kerala, Tamil Nadu, Odisha).
  • With the Indian rare earth market valued at over USD 9 billion (2024) and expected to grow significantly, expanding rare earth mining and processing can unlock economic benefits.
• Supporting the ‘Make in India’ Vision Through Value Chain Development: Major investments are underway to build full value chains, including magnet manufacturing plants in Visakhapatnam and integrated refining facilities in Kerala and Odisha to promote domestic manufacturing of high-value rare earth products, reduce import dependency, and position India as a global supplier.
• Strategic Reserves and International Collaboration to Secure Supply: India is actively developing strategic stockpiles of critical rare earth minerals to mitigate supply shocks.
  • It is also pursuing partnerships with resource-rich countries and forming alliances like the Quad to diversify sources.

The key challenges hindering their optimal utilisation

• Limited Domestic Production and Outdated Infrastructure: Although India holds the world’s third-largest rare earth oxide reserves (about 6.9 million tonnes) and nearly 35% of global beach sand mineral deposits, its actual production remains modest, with mine output at only around 2,900 metric tons per year — less than 1% of global supply.
• Geopolitical and Supply Chain Vulnerabilities: India’s dependence on imports from geopolitically sensitive regions, particularly China, exposes its critical technology sectors to supply disruptions.
  • The ongoing global competition for critical minerals exacerbates price volatility and availability risks.
• High Capital Costs and Long Lead Times: Establishing integrated mining and processing infrastructure demands substantial investment.
• Lack of Downstream Processing and Value Addition: India’s rare earth sector primarily focuses on mining and initial processing (like separation and oxide production).
  • However, it has limited capabilities in producing intermediate products like alloys, permanent magnets, and finished components essential for advanced technology applications.
• Environmental and Social Risks: Rare earth mining involves extracting minerals associated with radioactive elements like thorium, posing environmental and health hazards requiring stringent regulatory oversight.

Measures to Strengthen Its Rare Earth Materials Ecosystem in India

• Fast-track the National Critical Mineral Mission (NCMM): Accelerate mineral mapping, exploration of 1,200 critical mineral blocks by 2030, and expand domestic refining and processing capacity.
• Develop Integrated REE Manufacturing Clusters: Create specialised hubs in Odisha (LREEs), Andhra Pradesh (HREEs), and Tamil Nadu (magnet manufacturing) to build a full value chain, drawing inspiration from Australia’s cluster model.
• Create Strategic Stockpiles: Build government-backed reserves of rare earths and introduce price floors/minimum procurement guarantees to reduce supply shocks and market volatility.
• Expand PLI for Rare Earth Magnets: Increase funding to scale domestic magnet manufacturing and meet 15% of global demand by 2030, supporting EVs and renewable sectors.
• Boost R&D and Circular Economy: Set up Centres of Excellence (CoEs) for green mining and promote large-scale recycling of REEs from e-waste, following Japan and South Korea’s best practices.
• Streamline Regulations with Strong Safeguards: Simplify mining/environmental clearances while ensuring strict safeguards for monazite-rich and radiation-sensitive deposits.

Conclusion:

Nobel laureate Joseph Stiglitz rightly observes that the key question for developing economies is not merely “What can an economy produce today?” but rather “What can it learn to produce?”—a principle that should guide India’s strategic advancement in rare earths. To realise this vision, India must adopt a comprehensive rare earth strategy by swiftly operationalising the National Centre for Mineral Materials (NCMM), expanding PLI incentives, developing integrated industrial clusters, and streamlining regulations with robust environmental safeguards.