File picture of workers transporting soil containing rare earth elements for export at a port in Lianyungang, Jiangsu province, China
| Photo Credit: Reuters
The story so far:
Amid the ongoing U.S.–China trade war, Chinese authorities have reportedly imposed export controls on rare earth elements (REEs) and magnets that are needed in a range of manufacturing activities, from semiconductor fabrication units to defence equipment. This has been one of the more recent salvos in the trade war between the two countries, but the export restrictions apply to any Chinese refinery that can export refined rare earths outside the country.
What are rare earth elements?
Rare earth elements are a series of seventeen substances that are present in the earth’s crust. Unlike what the name may indicate, rare earths occur plentifully in nature, but the rarity comes from the ability to isolate them chemically and make them usable in industrial applications. Heavy and light rare earths occur naturally in several countries, such as India, China, Myanmar, Japan, Australia and North Korea.
China’s curbs target dysprosium, gadolinium, lutetium, samarium, scandium, terbium, and yttrium, seven of the seventeen elements classified as REEs.
Dysprosium’s so-called magnetic susceptibility makes it ideal for use in hard disks and car motors; gadolinium is used in nuclear reactors for shielding and in some medical equipment; lutetium and compounds with it are used in PET scanners and in petroleum refineries; samarium is used in powerful magnets in personal electronics; scandium–aluminium alloys are used in fighter aircraft; terbium is used in lighting for personal electronics; and yttrium is used in cancer treatments and superconductors.
What are China’s export restrictions?
While rare earths are found in multiple countries, refining them, particularly heavy REEs like the ones described above, has been an area dominated by China. A heavy rare earth facility opened in Vietnam is currently shuttered over a tax dispute. As such, practically all heavy REEs used all over the world are refined in China.
From personal electronics to defence, therefore, Beijing has enormous leverage over the entire world for a range of supply chains for critical raw and intermediate materials. The export restrictions don’t appear to amount to an outright ban, but could interrupt supplies to countries for a few weeks as refiners work through the process of getting permits.
What is the impact on India?
Indian supply chains may not be immediately impacted by REE export restrictions in China. While the government has taken steps to boost domestic production of semiconductors and defence equipment, the more advanced stages of manufacturing typically happen abroad in countries like China itself, and Japan. The latter country has already taken steps to insulate itself from REE supply shocks, by building a months-long stockpile.
India has recognized the importance of REE production, as it is estimated to have 6% of their total deposits. Mining and refining activities tend to present great environmental strain, which have been factors in India’s practically non-existent capabilities in those activities.
India has light REE extraction capabilities through the state-owned Indian Rare Earths Ltd, such as monazite extraction from beach sand in Kerala (monazite is not subject to China’s export restrictions).
India imports a limited quantity of REEs, reflecting the state of the country’s current position on global supply chains. 2,270 tonnes of REEs were imported in 2023–24, the Ministry of Mines said in a Lok Sabha response earlier in April. As such, the country’s strategy depends on both boosting domestic production and imports.
What is the government’s plan?
“As a policy framework for utilizing critical minerals, including rare earth metals, the National Critical Mineral Mission (NCMM) has been launched, which is India’s strategic initiative to secure critical mineral supply chain by increasing domestic critical minerals production and foreign supply sources,” the Ministry said in Parliament.
Critical minerals are a larger umbrella under which REEs fall — in a 2022 list of 30 critical minerals notified by the Union government, all 17 REEs were one item.
“China’s restrictions on certain critical minerals, the Russia–Ukraine War, and other issues highlight the fragility of critical mineral supply and the need for diversifying sources,” the Ministry of Mines said in a presentation on the NCMM in January.
Under the NCMM, the government has said it will facilitate or engage in 1,200 exploration projects, award exploratory licenses to incentivise private exploration, and auction more critical mineral blocks. The mission also aims to streamline regulatory approvals for critical mineral exploration and extraction.
Published – April 22, 2025 08:30 am IST