Rare Earth Elements: Strategic Importance and Reducing Import Dependence – Explained, pointwise

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India’s growth trajectory is witnessing an inflection point. As the economy moves ahead on path of recovery, the foundations of a new economy are emerging. India has been witnessing a massive solar energy push, an Electric Vehicle (EV) ecosystem, and a speciality chemicals sector that is becoming a global hub. India is moving towards a greener, cleaner, and technologically enhanced economy. However, the transition to this economy is dependent upon a slew of strategic elements as inputs. From EV batteries to Solar Cells, from Nuclear Reactors to high-tech electronics these strategic elements are indispensable. These elements are 17 in number and together known as Rare Earth Elements. Controlling the supply chains of rare earth elements is an exercise in consolidating power over critical technologies. India is almost 100% import dependent for most rare earths. However, India has great potential for domestic production as it possesses the 5th highest reserves of rare earths in the world.

What are Rare Earth Elements?

Rare earth elements (REEs) are a group of 17 chemically similar metallic elements in the periodic table. It comprises 15 lanthanides elements (lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium and lutetium), plus scandium and yttrium.

The rare earths are actually not ‘rare’ in nature; they occur abundantly but are often not concentrated enough to undertake viable extraction.

Characteristics: REEs are characterized by high density, high melting point, high conductivity, and high thermal conductance. REEs are classified into Heavy REE and Light REE.

Sources: REEs do not occur in a free state. They are found in mineral oxide ores. The principal sources of rare earth elements are bastnaesite, xenotime (commonly found in mineral sand deposits), loparite (occurs in alkaline igneous rocks) and monazite.

Rare Earth Elements UPSC

Source: The Print

What is the utility of Rare Earth Elements?

Rare earths are used in small quantities but have qualities that make them essential. Neodymium, for example, is a critical component for permanent magnets and has the ability to carry material 1,300 times its own weight. Neodymium-based permanent magnets are key components in EV traction motors and wind turbines. Like neodymium, dysprosium is also an important component of permanent magnets that will be used in EVs and wind turbines. 

Europium is necessary for LED bulbs and colour television screens. Samarium is used in optical lasers. 

Several rare earths also have important uses in emerging hi-tech medical technologies. Further they make the refining of crude oil into gasoline more efficient and are used in many specialty metal alloys. Their sector-wise uses include:

Aerospace and Defence: Used in precision-guided munitions in missiles, high-power sonar on ships and submarines, stealth helicopters, etc.

Health care: used in medical imaging devices, such as MRIs, modern surgical machines.

Clean Energy: Used in wind turbines, electric car batteries and energy-efficient lights (LEDs and CFLs).

Nuclear Energy: useful for controlling nuclear reactions and is used in control rods.

Electronics: Used as phosphors in cathode ray tubes, fluorescent lamps and X-ray intensifying screens.

Chemicals, Oil Refining, and manufacturing: Make the refining of crude oil into gasoline more efficient and are used in many specialty metal alloys.

What is the current status with respect to the reserves of Rare Earth Elements?

In India, significant rare earth minerals found are ilmenite, sillimanite, garnet, zircon, monazite, and rutile, collectively called Beach Sand Minerals (BSM).

Monazite is the principal source. Monazite is mainly found in Odisha, Andhra Pradesh, Tamil Nadu, Kerala, West Bengal, and Jharkhand. According to the India Minerals Yearbook (2019), India had 12.47 million tonnes of Monazite Resources.

They are classified as atomic minerals and are therefore not at par with other minerals. The reason that they are classified as atomic minerals is because some of these elements occur in the earth’s surface along with thorium and uranium which are radioactive minerals.


The total world reserves are estimated at 120 million tonnes of rare earth oxides equivalent content (REO). Out of this, China alone accounts for 44 million tonnes followed by Vietnam and Russia.

China holds the leading position among producers of rare earth oxides with 140 thousand tonnes. The other major producers are Myanmar, Australia, USA, Russia and Malaysia. 

Concentrated/partially-processed intermediate products are further processed at many locations in Europe, USA, Japan and China. 

Reserves of Rare Earth Elements by countries UPSC

What is the strategic significance of Rare Earth Elements?

Multiple Uses: They are used in multiple hi-tech applications and processes like EVs, Medicinal appliances, LEDs etc. that domestic production of such elements becomes inevitable. 

Rising Demand: The multifarious uses of rare earth elements in new age technologies shows that their demand is going to rise in future. For instance, the current demand of  neodymium in India is small, at around 900 tonnes per annum, because domestic manufacturing of EVs and wind turbines is still limited. However, as manufacturing of EVs and wind turbines picks up, the demand for neodymium is estimated to rise sharply by 6-7 times by 2025 (6,000 tonnes) and by 18-20 times by 2030 (20,000 tonnes). 

Reducing Import Bill: India is almost 100% import dependent for most rare earths which creates a huge pressure on foreign exchange. Further, prices of rare elements are consistently rising due to the rising demand. For instance, the global price of neodymium has risen sharply from under US$ 100 per kg in 2018 to over US$ 200 per kg at present.

Highly Concentrated Supply Chain: The global supply scenario for rare earths is highly concentrated, much more than oil and hydrocarbons, which poses a strategic challenge. Until a few years ago, China controlled 90% of the supply of rare earths. Now, after aggressive production by the US, Australia and Canada, China’s share is down to 60% but still dominant. In 2010, following dispute with Japan over Senkaku Islands in the East China Sea; China shut down exports of Rare Earth Elements to Japan. Given India’s border dispute, China might resort to similar tactics in future.

Huge potential: India has greater reserves than the US and Australia, only behind China, Vietnam, Russia, and Brazil. With Russia embroiled in conflict, the onus is on India to emerge as a supplier not just for domestic use but for international consumption.

What are the reasons behind the limited production of Rare Earth Elements in India?

First, rare earth materials are not concentrated enough in many geographical locations with respect to commercial viability. It is expensive to commercially produce them.

Second, at present they are classified as atomic minerals. The mining for rare earths is reserved exclusively for government companiesCurrently, there are only two companies – Indian Rare Earths Ltd (IREL, owned by GoI) and Kerala Minerals and Metals Ltd (owned by Kerala government) that can mine them. Further, their production capacities and technological capabilities are limited which is why India is import dependent. 

Third, IREL’s primary source of revenues is not rare earths. Most of its income comes from the production and marketing of other minerals contained in beach sands. Since its revenue does not depend upon rare earth elements, IREL has little need to produce and research. IREL has poor incentives to refocus itself as a globally competitive rare earth extraction and processing firm. This has restricted India to be a low-cost exporter of rare earth oxides instead of higher value-added products.

Fourth, the present system (clubbing rare earth elements with atomic minerals) ends up separating the rare earths ecosystem from other R&D ecosystems like electronics or metallurgy. This severely impacts the overall umbrella of strategic research, undercutting the interdisciplinary nature of modern research work. R&D is dominated by DAE and the Bhabha Atomic Research Centre (BARC), with negligible participation by the Academia and private sector. The situation is similarly disintegrated with regards to exploration. The Geological Survey of India (GSI), Mineral Exploration Corporation Limited (MECL) and Atomic Minerals Directorate for Exploration and Research (AMD) operate in overlapping spheres while working in siloes.

Fifth, Beach sand mining was permitted until a few years ago but was banned in 2016 in an attempt to conserve strategic minerals including rare earths and thorium.

What steps can be taken to boost domestic production?

First, the Ministry of Mines has recently proposed moving the 17 rare earths elements outside the ambit of atomic minerals so that commercial mining by private entities and other PSUs can take place. Further, Private players can be mandated not to extract thorium and uranium from monazite rock or beach sands and restrict themselves to rare earths.

Second, Based on availability and criticality of rare earths, the Ministry of Mining has conducted an analysis for prioritising efforts in both exploration and foreign acquisition. India has an established relative abundance of Light Rare Earths: elements from Lanthanum to Samarium. The initial focus can be on extraction of these elements. Efforts are already on to discover Lithium deposits as well. A joint venture of 3 PSUs, named Khanij India Bidesh Limited (KABIL), has been entering into long-term contracts for India’s critical mineral needs.

Third, the government can create a new Department for Rare Earths (DRE) under the Ministry of Mines. This DRE should oversee policy formulation and focus on attracting investment and promoting R&D. It could coordinate with other agencies to partner directly with groupings such as the Quad. This will help in building up a strategic reserve as a buffer against global supply crises.

Fourth, the government should also create an autonomous regulator, the Rare Earths Regulatory Authority of India (RRAI). It would resolve disputes between companies in this space and check compliance.

Fifth, IREL can be de-merged into two different entities with appropriate amendments to the Atomic Energy Act. One entity can focus exclusively on Thorium extraction and can be retained under the Department of Atomic Energy. The other entity can specialise in other available rare earth processing and can be under the control of the proposed DRE.

Sixth, a consolidation in the exploration of rare earths is necessary. The National Mineral Exploration Policy, 2016 had a proposal to set up the National Centre for Mineral Targeting (NCMT) to replace the present system of having committees within the Geological Programming Board of the Geological Survey of India. NCMT has not been created yet.

Seventh, Private industry must be incentivised and enabled to set up processing capabilities beyond the extraction phase. Such a move will be crucial for higher value added products having robust domestic supply chains. Private Industry linkage is necessary to promote R&D Ecosystem as well.

Eighth, the Government should have Rare Earth Strategic Reserves, similar to the Strategic Petroleum Reserves. Having Rare Earth Strategic Reserves can help provide a consistent demand environment, as well as a fallback at times of any unfavourable action by the Chinese Government.


The time is right to focus on boosting the indigenous supply of rare earth metals that currently contribute a total value of nearly US$ 200 billion to the Indian economy. A sustained supply is also essential to reduce its dependence on Chinese imports and truly realize the vision of Atmanirbhar Bharat.

Source: The Times of India, Business Insider, Indian Minerals Yearbook, Firstpost

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