India moves to conserve rare earths, seeks halt to exports to Japan

India has asked state-run Indian Rare Earths Limited (IREL) to suspend its rare earth exports to Japan under a 13-year-old bilateral agreement, prioritising domestic needs and reducing dependence on China. At a recent meeting with auto industry executives, Union Minister of Commerce and Industry, Mr. Piyush Goyal, directed IREL to conserve critical materials like neodymium, used in electric vehicle (EV) motors, for local use. IREL’s exports have been justified by limited domestic processing capacity. However, recent Chinese curbs on rare earth exports have underlined the need for self-reliance. In 2024, over 1,000 metric tonnes of rare earths were exported to Japan, one-third of IREL’s total 2,900 tonnes output.
The rare earths are currently processed by Toyos Rare Earths India, a unit of Japan’s Toyota Tsusho. While India has the fifth-largest rare earth reserves globally—estimated at 6.9 million metric tonnes—it lacks domestic magnet production capacity, importing nearly 53,748 tonnes of magnets in FY25, mostly from China. IREL operates an extraction unit in Odisha and a refining unit in Kerala and plans to produce 450 metric tonnes of neodymium in FY26, with plans to double that by 2030. Though the existing bilateral agreement with Japan may constrain India, discussions are expected to be resolved amicably. The government is now preparing incentives for setting up domestic rare earth processing and magnet manufacturing facilities to support sectors like defence, nuclear energy, EVs, wind turbines, and medical equipment. IREL is also exploring partnerships to scale up local magnet production, marking a shift towards securing critical mineral supply chains and advancing India’s green and strategic technology ambitions.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.