India possesses the world's third-largest reserves of rare earth elements, yet its production lags far behind global leaders, exposing deep-seated structural bottlenecks in the mining sector.

A recent report by Amicus Growth, published on 29 December, underscores this disparity, noting that while India holds substantial resources, regulatory hurdles and limited processing capabilities have stifled output.

The country boasts approximately 6.9 million tons of rare earth oxide (REO) reserves, positioning it just behind China and Brazil in the global rankings. China dominates with 44 million tons, followed closely by Brazil's 21 million tons. This places India ahead of other significant holders such as Australia (5.7 million tons), Russia (3.8 million tons), Vietnam (3.5 million tons), and the United States (1.9 million tons).

Despite this enviable reserve base, India's production in 2024 amounted to a mere 2,900 tons, securing it only the seventh spot worldwide. In stark contrast, China churned out 270,000 tons, cementing its position as the unchallenged leader. The United States followed with 45,000 tons, while Myanmar produced 31,000 tons, and Australia, Thailand, and Nigeria each managed around 13,000 tons.

This output represents less than 1 per cent of global production, even though India's reserves account for 6-7 per cent of the world's total estimated at 90-110 million tons of REO. China's near-50 per cent share of reserves further entrenches its control over both supply and manufacturing chains.

The primary reserves in India are embedded in monazite-rich coastal sands, which also harbour thorium—a radioactive element that complicates extraction. Mining and processing these deposits demand rigorous adherence to stringent regulations, adding layers of complexity and cost that have long deterred large-scale operations.

Historically, rare earth production in India has been curtailed by a restrictive regulatory framework. For decades, activities were monopolised by Indian Rare Earths Limited (IREL), where these elements were viewed merely as by-products rather than strategic assets vital for modern technologies.

Beyond extraction, the true bottleneck lies in processing and refining. While numerous nations possess reserves, the capacity to refine rare earths into usable forms remains overwhelmingly concentrated in China, which commands about 90 per cent of global refining and nearly the entirety of heavy rare earth processing.

India's refining infrastructure is woefully inadequate, resulting in annual production hovering at just a few thousand tons. Consequently, the nation has contributed negligibly to international rare earth element (REE) trade, missing out on economic and strategic leverage.

A modest revival is underway through a Japan-linked joint venture in Visakhapatnam, signalling India's tentative re-entry into the sector. However, the venture's scale remains insufficient to bridge the chasm with global frontrunners.

The report emphasises that India's predicament stems not from resource scarcity, but from execution failures, underdeveloped processing facilities, and poor integration across the value chain.

Rare earths are indispensable for high-tech applications, including electric vehicles, wind turbines, defence systems, and electronics—sectors where supply chain vulnerabilities could undermine national security and economic growth.

China's dominance extends from mining to end-user manufacturing, affording it unparalleled influence. For India, dependence on imports exposes it to geopolitical risks, particularly amid escalating global efforts to diversify away from Chinese supplies.

Global production dynamics reveal further imbalances. The United States has ramped up domestic output through initiatives like the Mountain Pass mine, while Australia invests heavily in projects such as Lynas Rare Earths. Myanmar's surge, driven by ionic clay deposits, highlights how favourable geology can accelerate production elsewhere.

India's monazite sands, concentrated along the southern and eastern coasts, offer vast potential but require innovative extraction technologies to separate thorium safely. Advanced methods, such as bio-leaching or dry processing, could mitigate environmental concerns and regulatory delays.

Policy reforms are crucial. The government has initiated steps, including auctions for beach sand mineral blocks and the establishment of a Rare Earths Mission under the Department of Atomic Energy. Yet, implementation lags, with environmental clearances and land acquisition proving protracted.

Private sector involvement could catalyse progress. Partnerships with international firms, as seen in the Visakhapatnam project, bring technical expertise and capital. Scaling these collaborations might enable India to capture a larger slice of the projected $20 billion global rare earth market by 2030.

Downstream integration poses another challenge. Refining rare earths demands sophisticated separation techniques for the 17 elements, from light to heavy variants. China excels here due to decades of investment, while India must build similar capabilities to avoid exporting raw concentrates at low value.

Strategic imperatives amplify the urgency. Rare earths underpin India's defence modernisation, powering missiles, radar systems, and fighter jets—aligning with the user's expertise in aerospace and military technology. Self-reliance aligns with the Atmanirbhar Bharat initiative, reducing vulnerabilities in supply chains critical for ISRO satellites and HAL aircraft.

International alliances offer pathways forward. The Quadrilateral Security Dialogue (Quad) framework, involving India, the US, Japan, and Australia, fosters rare earth cooperation. Joint ventures could pool resources, sharing refining technologies and establishing alternative supply hubs.

Environmental and social considerations cannot be overlooked. Monazite mining raises radiation risks, necessitating robust waste management and community rehabilitation plans. Sustainable practices will be key to securing approvals and international partnerships.

Investment in research and development is imperative. Institutions like the Bhabha Atomic Research Centre (BARC) and IREL could lead innovations in solvent extraction and ion-exchange processes, tailored to Indian ores.

The Amicus Growth report concludes that without decisive action on these structural issues, India's reserves risk remaining untapped potential. Bridging the gap demands a holistic strategy encompassing policy overhaul, technological upgrades, and global collaboration.

India's rare earth sector stands at a crossroads. Leveraging its third-ranked reserves could propel it into a pivotal global player, bolstering economic resilience and strategic autonomy in an era of intensifying resource competition.

Based On ANI Report