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By Neha Arora and Aditi Shah
NEW DELHI -India has asked state-run miner IREL to suspend a 13-year-old agreement on rare earth exports to Japan and to safeguard supplies for domestic needs, two sources familiar with the matter told Reuters, aiming to reduce India’s dependence on China.
IREL also wants to develop India’s capacity for rare earth processing, which is dominated globally by China and has become a weapon in escalating trade wars. China has curbed its rare earth materials exports since April, pressuring automakers and high-tech manufacturers worldwide.
In a recent meeting with auto and other industry executives, Indian Commerce Minister Piyush Goyal asked IREL to stop its exports of rare earths, mainly neodymium, a key material used in magnets for electric vehicle motors, one of the sources said.
The Commerce Ministry, IREL and the Department of Atomic Energy, which oversees IREL, did not immediately respond to requests for comment.
The sources declined to be identified because of the sensitivity of the matter.
Under a 2012 government agreement, IREL supplies rare earths to Toyotsu Rare Earths India, a unit of Japanese trading house Toyota Tsusho, which processes them for export to Japan where they are used to make magnets.
In 2024, Toyotsu shipped more than 1,000 metric tons of rare earth materials to Japan, commercially available customs data showed. That is one-third of the 2,900 tons mined by IREL, although Japan relies mainly on China for its rare earths supply.
Toyota Tsusho and Toyotsu did not immediately respond to requests for comment.
IREL has been exporting rare earths due to a lack of domestic processing capacity, but following the recent disruptions to supplies of Chinese material it wants to keep its rare earths at home and expand domestic mining and processing, a second source said, adding that IREL is awaiting statutory clearances at four mines.
However, India may not immediately be able to stop supplies to Japan because they fall under a bilateral government agreement, the person said.
IREL wants this to be “amicably decided and negotiated because Japan is a friendly nation”, the person added.
Japan’s Trade Ministry said in a statement to Reuters: “We would like to refrain from answering questions about bilateral exchanges in general, not just about this matter.”
EXPANSION PLANS
China’s recent export controls on rare earth materials have rocked the global auto industry, which has warned of supply chain disruptions and production halts.
China also weaponised its supplies in 2010, when it briefly stopped shipments to Japan. That prompted the Japanese to turn to India for rare earths.
India has the world’s fifth-largest rare earth reserves, at 6.9 million metric tons, but there is no domestic magnet production. India relies on imported magnets, mainly from China.
In the fiscal year to March 2025, India imported 53,748 metric tons of rare earth magnets, government data showed. These are used in automobiles, wind turbines, medical devices and other manufactured goods.
Rare earth mining is restricted to IREL, which supplies India’s Atomic Energy Department with materials for nuclear power projects and defence-related applications. India lacks wide-scale technology and infrastructure to mine rare earths, and the development of any commercially viable domestic supply chain is years away, analysts said.
IREL has a rare earths extraction plant in the eastern Indian state of Odisha and a refining unit in Kerala, in southern India. The miner, founded in 1950, plans to produce 450 metric tons of extracted neodymium in the fiscal year to March 2026 with a plan to double that by 2030, the second person said.
It is also looking for a corporate partner for the production of rare earth magnets for the auto and pharmaceutical industries, the person said.
India is firming up plans for incentives to companies to set up rare earth processing and magnet production facilities to meet local demand, people familiar with the matter told Reuters earlier this month.
This article was generated from an automated news agency feed without modifications to text.
