India's rare-earth magnet plan might not meet future demand
What's the story
The Indian government has announced an $800 million plan to produce high-strength neodymium-iron-boron (NdFeB) magnets. The scheme aims to create up to 6,000 tons of these magnets in annual capacity. They are crucial for electric vehicle motors, wind turbines, and other clean energy equipment. However, Bernstein estimates that this initiative will only meet about 44% of the country's total demand by 2035.
Demand forecast
Rapidly rising demand for rare-earth permanent magnets
India's current annual consumption of rare-earth permanent magnets stands at around 3,500-4,000 tons.
However, this figure is expected to grow significantly due to the increasing adoption of electric cars and two-wheelers, as well as additional wind power and energy-efficient appliances.
Official forecasts already put 2030 demand at 8,220 tons.
Production focus
Government scheme focuses on middle stages of production
The government's scheme emphasizes the middle stages of production, which include converting rare-earth oxides into metal, alloy, and finished magnets.
This is different from just final assembly.
So far, 20 companies have expressed interest in this initiative. Those selected will be required to operate at least half of their capacity within three years of being chosen for the project.
Supply strategy
Initial years will require imports
Despite having its own rare-earth resources, mainly from beach sands, India will still have to rely on imports and state-owned companies for the initial years.
The country's producer of neodymium-praseodymium oxide is IREL, which cannot meet the entire 6,000-ton plan alone.
Additional supply from IREL and another state firm will be required in addition to imports during these early years.
Challenges ahead
Technical know-how and heavy rare earths are challenges
One of the biggest hurdles is technical know-how. Producing magnets suitable for cars requires specialized skills that Chinese and Japanese companies have honed over decades.
Bernstein predicts that the strongest Indian projects will partner with Japanese technology firms.
Heavy rare earths like dysprosium and terbium, which enable magnets to work at high temperatures, are another weak point as India has very little of these resources.