India marks new rare-earth hotspots to cut dependence on China
What's the story
India is actively exploring inland deposits of rare earth elements (REEs) in states like Arunachal Pradesh and Madhya Pradesh. The move comes as part of the country's efforts to reduce its dependence on China for these critical minerals. A recent study by the Ministry of Mines highlighted the notably high neodymium content in Arunachal Pradesh's Papum Pare district, a key component for electric vehicles (EVs) and advanced electronics.
Discovery spread
Other ree-rich regions
Apart from Papum Pare, other regions with REE-rich soils include Assam's Karbi Anglong and Meghalaya's Sung Valley. Madhya Pradesh's Singrauli coalfields have also been found to contain "promising" REE deposits. These discoveries show that strategic metals are not just limited to India's known beach sands or alluvial deposits but are also present in inland areas like forests, hills, and coalfields.
Supply chain concerns
Heavy reliance on China
Despite the new discoveries, India continues to rely heavily on China for rare earth magnets. An Indian auto company executive told The Economic Times that "India simply can't keep all its eggs in one basket," highlighting the potential risks of this dependency. According to a written reply to the Rajya Sabha on August 1, China accounts for 85-90% of India's import volumes and 60-80% of its import value in two key categories.
Element significance
What are rare earth elements?
REEs are a group of 17 elements, divided into light and heavy categories. Light REEs like neodymium and praseodymium are essential for EV motors and wind turbines, while heavy REEs such as dysprosium and terbium are critical for high-performance applications like fighter jets. Although rare earths are classified as critical minerals, not all critical minerals fall under this category.
Mineral assessment
Need for resilient supply chain
In the fiscal year 2024-25, the Geological Survey of India conducted 195 exploration projects to assess critical minerals, including REEs. While these new clean-tech metal pockets are promising for the future, industry experts stress that a diversified and resilient supply chain is urgently needed. This is particularly important given China's dominance in this sector; as of 2024, China mines nearly 70% of the world's rare earths and controls an overwhelming 90% refining capacity, according to the US Geological Survey's data.
Industry impact
Automakers' strategies to mitigate risks
The global impact of China's April export restrictions on rare earths was felt by Indian automakers heavily reliant on Chinese rare earth magnets. Maruti Suzuki chairman RC Bhargava said the disruption affects China too, implying it won't last long. Mahindra's auto and farm sectors executive director, Rajesh Jejurikar, assured that they are covered on the rare earth magnet issue with a combination of inventory planning and alternative sourcing.
Sourcing strategies
Supply chain challenges for EV manufacturers
TVS Motor, which plans to launch electric motorcycles and bicycles later this year, is actively looking for materials from non-Chinese sources. Ather Energy has already flagged potential volume shortfalls this quarter due to these supply chain constraints. Meanwhile, Bajaj Auto has temporarily halted production in response to the current situation.