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Approach:

  1. Introduction on Rare Earth Minerals.
  2. Briefly state the properties & uses of Rare earth minerals.
  3. Highlight the major problems in REE exploration in India.
  4. Conclusion & Way forward.

The rare earth elements (REEs) are a set of 17 metallic elements in the periodic table. They are found in relative abundance in the Earth’s crust. However, unlike other metals they do not always occur in a concentrated area, which makes them harder and more expensive – often uneconomical – to explore. But their properties make their use a necessity.

Currently, China controls more than 60% of the global production on REEs. India too possess significant reserves of REEs, much less than China but significantly more than the US and Australia – the big producers. There is a strong strategic and economic case for India to focus on this sector.

Properties & Uses of REEs: Many REEs are lightweight, some luminous, some have higher strength especially when combined with metals, while others have superior conductivity. They find use in almost every electronic device. In manufacturing, they are used in automobile catalytic converters, high-strength magnets and metal alloys. They also have medical applications in magnetic resonance imaging (MRI) and cancer drugs. It is also useful in future energy transition technologies – in wind turbines, electric vehicles & its batteries, etc. They can be used in currency notes to prevent counterfeiting. All these make them highly strategic.

Problems plaguing India’s REE sector:

  • In India, only the government can explore and mine the REEs. The only Central government PSU that mines REEs is IREL (India) Ltd., under the administrative control of Department of Atomic Energy. The other PSU that mines REEs is the Kerala Minerals and Metals Ltd. With an estimated reserves at 6,900 kt, in 2019-2021 only 9 kilotonnes were mined. In comparison, Australia with reserves of 4000 kt produces around 22 kt/year and US with 1800 kt reserves produces 170 kt/year. Thus, given its reserves, India must make its presence felt.
  • At the upstream level, extraction of minerals occur. In the midstream, they are converted into metals. Finally in downstream, manufacture of components take place. Currently, India’s capability is only upstream, and that too partial. To use REEs in various applications, a purity of 99.99% is required. India’s two producers achieve only 96% purity, following which REEs are exported with the country further purifying elements. Therefore, effectively, India is fully import-dependent for REEs in any usable form. This can be a serious problem, given India’s rising demand – with electronics manufacturing, EVs and renewable energy, demand may escalate to 28 kt/year by 2030 – creating demand-supply mismatch.
  • Globally, the demand-supply situation is now balanced. But demand is expected to grow much faster than supply, thereby pushing up the prices. This can put pressure on countries like India that need to import REEs for all their requirements.

Conclusion & Way forward: Given its significance and India’s underperformance in this sector, the government should consider deregulating the REE mining, ending the public sector monopoly on production & exploration. IREL needs to come under the control of Ministry of Mines so that it can diversify its focus from just atomic minerals. If need be, it can even be divested, with GOI as the majority stakeholder. The key lies in exploration. Globally, this task is performed by exploration companies that take on the risk of failure with the possibility of monetizing any discovery. However, this is not allowed in the Mines and Minerals (Development & Regulation) Act. Hence, besides developing the entire value chain, suitable amendments need to be brought in the MMDR Act. With the right policies, India can become a hub for production of REEs.

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