India looking for other magnet sources after China’s curbs on rare earth metals

India is in talks with China on ensuring the supply of permanent magnets derived from rare earth minerals but is also working on “alternate sources” for the critical components, commerce and industry minister Piyush Goyal said.

He said the government is in constant touch with Indian industry to speed up the development of local sources.

China, which controls 90% of the supply of rare earth magnets, has imposed curbs on supplies. These magnets are essential inputs in the manufacturing of cars, electric vehicles and renewable energy equipment, among others.

“There is a concern… our embassy is in dialogue with them (China)… commerce and industry ministry is also working,” Goyal said, adding that the government had already begun work on developing alternate sources.

‘Hope Good Sense Prevails’

Goyal was speaking to reporters after his interaction with local industry in Bern.

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“In a way, it’s a wake-up call for all those who have become over-reliant on certain geographies. It’s a wake-up call for the whole world that you need trusted partners in your supply chain,” the minister said.Auto industry and other industry bodies have represented the matter to the government seeking an early resolution of the problem.China had in April mandated special export licences for seven rare earth elements and related magnets.

It is seeking an undertaking that permanent magnets it supplies will not be re-exported to the US, nor will they find applications in the defence industry. ET reported on June 4 that nine auto component manufacturers have received endorsement from the Chinese embassy in India for importing critical rare earth magnets, but supply has not resumed as the neighbouring country’s commerce ministry has not given its nod.

“Obviously, there are issues around the stopping of permanent magnets from China to India, which will affect our auto sector, particularly, and several white goods and other sectors. Some companies have put in their applications, and we hope that good sense prevails and they get their approvals for permanent magnets,” the minister said. The Centre is also looking to Indian Rare Earths Ltd to speed up the development of domestic resources, Goyal said.

Asked if the government will consider a production-linked incentive scheme for these magnets, Goyal said he had discussed the matter with the auto industry and was confident of resolving the matter.

“They are in dialogue with our innovators, startups and they say they will take care of any funding requirement or pricing correction that may need to encourage faster rollout and growth of this sector,” Goyal said.

On alternative sources, the minister said these could also be some technologies that India is developing.

“The government, the industry and startups and innovators are all working as a team and we are confident that there may be a problem in the short run but we will emerge winners in the mid to long runs,” he said.

(The reporter is in Bern at the invitation of the ministry of commerce & industry)

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