India may look at temporary curbs on export and even overseas sale of rare earth elements specially to Japanese companies till the crises over supplies tide, sources said. The Indian Rare Earth Ltd (IREL), a PSU under the Department of Atomic Energy, is amongst those that have purchase sale agreements with Toyota Tsusho Corporation and an Indian entity, Toyotsu Rare Earths India Pvt Ltd.

The purchase sale agreement was renewed on February 7, 2022, as per an older Annual Report of IREL.

Average annual production of rare earth in India in 2024 was around 2,900 tonnes, primarily by the CPSE. Toyotsu purchases these rare earth elements primarily for further processing and usage in EV component making.

“Exports or sale are of relatively small quantity, but, nonetheless, we could look at possible curbs till some stability in rare earth magnets or other elements stabilise. But these are just early level discussions. Even if a stockpiling is to be done, we (in India) would require the appropriate storage and stocking infrastructure,” a source said.

India at present is staring at a situation where EV makers continue to run short of rare earth magnets, a key component, following export curbs by its largest producer, China. China controls 50 per cent of the mining of rare earth elements, 70 per cent of the processing and 90 per cent of the supplies.

India’s rare earth imports are around 3,600 tonnes and magnet imports are at 870 tonnes.

China’s export ban from April – imposed on seven minerals that include REEs such as dysprosium, gadolinium, lutetium, samarium, scandium, terbium, and yttrium. These elements are crucial for various industries, including electronics, defence, and electric vehicles.

There is no export ban or restriction on neodymium, and praseodymium shipments.

Cost Disadvantage for India

While, there is a push towards securing supplies and producing rare earth magnets, India continues to be a cost-wise disadvantage. Overall cost works out to be $57 per kg for rare earth magnets, in India; higher by 10-odd per cent against $52 per kg for China.

Even when production schemes are incentivised, Indian-makers will have a higher production or overhead cost ranging 3 to 9 per cent. This was revealed at high level review meeting carried out some days back.

In fact, China continues to subsidise capex and processing tech, with complete control over final price of the item , rare earth magnet. In such a situation, all China needs to do is simply reduce prices of magnets to ensure it puts other competitors out of business; and also disrupt the supply chain, officials present told businessline.

For instance, in case of neodymium (Nd) and praseodymium (Pr) sourcing – and conversion cost – which are combined to make permanent magnets – China has a 9 per cent cost advantage because of incentives. China can secure the metals at $22 per kg, against $29per kg in India. This accounts for 42 per cent of the final product cost in China, against 51 per cent in India.

Similarly, China has zero technology transfer or procurement cost; whereas for India, it would account for 3- 5 per cent of the end offering cost. China has subsidised debt servicing charges too, thereby bringing down finance charges at $2.5per kg (approx 5 per cent) as against India, where it would be $6 per kg (11 per cent of end product cost), putting the subcontinent at a 6 per cent price differential disadvantage.

Absence of processing tech - where China has complete dominance - and feedstock availability are seen as key issues that needs to be addressed. Commercialisation of rare earth processing tech has not picked up in India either.

Published on June 13, 2025