India moves to conserve its rare earths, seeks halt to Japan exports, sources say

In a decisive move to secure critical mineral resources and reduce dependence on China, India has asked its state-run mining company, IREL (India Rare Earths Limited), to suspend a long-standing agreement for rare earth exports to Japan, according to sources familiar with the matter.

This India rare earth export suspension comes as the global race for rare earth security intensifies, especially after China tightened controls on its exports of these strategic materials earlier this year. Rare earth elements like neodymium are essential for manufacturing magnets used in electric vehicles, wind turbines, and defense applications.

IREL has been supplying rare earth oxides, particularly neodymium, to Toyotsu Rare Earths India—an affiliate of Japanese trading giant Toyota Tsusho—under a 2012 bilateral agreement. These materials are processed in India and then exported to Japan for use in high-tech industries. In 2024 alone, more than 1,000 metric tons of rare earth materials were shipped to Japan, a significant portion of IREL’s annual production of 2,900 metric tons.

However, recent discussions at the highest levels of Indian commerce indicate a change in strategy. At a meeting with industry stakeholders, including automotive and electronics executives, Commerce Minister Piyush Goyal urged IREL to safeguard its rare earth output for domestic consumption and development.

“India cannot afford to be vulnerable in a global supply chain crisis,” said one source familiar with the matter. “This is about future-proofing our industry and asserting our resource sovereignty.”

A Response to China’s Leverage

The India rare earth export suspension underscores New Delhi’s awareness of the geopolitical leverage China holds in the global rare earth supply chain. China accounts for the vast majority of the world’s rare earth processing and has historically weaponized its dominance. In 2010, Beijing briefly halted rare earth shipments to Japan during a diplomatic standoff—an act that prompted Tokyo to diversify its sources, including turning to India.

But now, even that alternative is becoming uncertain. China’s recent export curbs, implemented in April, have reignited fears of global supply chain disruptions, particularly in the electric vehicle and high-tech manufacturing sectors.

“Given the ongoing global tensions, India’s priority is now self-reliance,” said another source involved in the industry. “The country needs to ensure that our domestic sectors are adequately supplied.”

India: Rare Earth Potential and Limitations

India is home to the world’s fifth-largest reserves of rare earth elements, estimated at 6.9 million metric tons. Yet, the country lacks comprehensive domestic processing facilities and does not manufacture rare earth magnets. As a result, India imported over 53,000 metric tons of magnets in the fiscal year ending March 2025, most of it from China.

While IREL has historically exported rare earths due to underdeveloped local capacity, the tide is shifting. The company is awaiting clearances to operate four new mines and is scaling up its extraction and refining capabilities. It currently runs a separation plant in Odisha and a refining facility in Kerala.

Looking ahead, IREL aims to produce 450 metric tons of neodymium by March 2026 and plans to double that output by 2030. It is also scouting for corporate partners to help launch India’s first domestic magnet production unit, aimed at servicing the auto, electronics, and pharmaceutical sectors.

Navigating Diplomatic Terrain

Despite the urgency, India’s rare earth export suspension is complicated by the legally binding agreement with Japan. While India is signaling a strategic shift, sources say the government prefers a diplomatic resolution to avoid straining ties with a long-standing ally.

“This isn’t about confrontation; it’s about collaboration with transparency,” a senior official emphasized. “India values its relationship with Japan and wants this transition to be amicably negotiated.”

The Japanese government, for its part, declined to comment specifically on the matter but maintained its general stance of not disclosing details of bilateral discussions.

India: Building a Self-Reliant Future

India’s decision signals a critical inflexion point in the global rare earth narrative. With China’s supply chain dominance now seen as a strategic vulnerability, countries like India are stepping up efforts to develop alternative sources and infrastructures.

The government is reportedly finalising incentive schemes to attract companies to invest in rare earth processing and magnet manufacturing within India. This aligns with its broader vision of “Atmanirbhar Bharat”—a self-reliant India.

“Securing a local supply chain for rare earths isn’t just about economics,” said a senior trade expert. “It’s about national security, industrial growth, and technological independence.”

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