Context: Why did China block exports of rare earth elements?

Source: The Hindu

Chinese officials have reportedly placed export restrictions on rare earth elements and magnets, which are used in a variety of manufacturing processes, from semiconductor production facilities to defence equipment, amid the current trade war between the United States and China.

The planet’s crust contains a group of 17 chemicals known as rare earth elements. Contrary to what their name suggests, rare earths are abundant in nature; their rarity stems from their chemical isolation and commercial applicability. India, China, Myanmar, Japan, Australia, and North Korea are among the nations that naturally contain heavy and light rare earth elements.

Seven of the 17 elements categorized as REEs—dysprosium, gadolinium, lutetium, samarium, scandium, terbium, and yttrium—are the focus of China’s restrictions. While lutetium and its compounds are used in PET scanners and petroleum refineries, samarium is used in powerful magnets in personal electronics, scandium-aluminum alloys are used in fighter aircraft, terbium is used in lightning for personal electronics, yttrium is used in cancer treatment and superconductors, and dysprosium’s so-called magnetic susceptibility makes it perfect for use in hard disks and automobile motors.

China refines almost all of the heavy rare earth elements (REEs) utilized worldwide. China’s export limitations on REEs could not have an immediate effect on Indian supply chains. The more advanced stages of manufacturing usually take place abroad in nations like China and Japan, despite the government’s efforts to increase domestic manufacture of defense equipment and semiconductors.

Given that REEs are thought to make about 6% of their overall resources, India has acknowledged the significance of producing them. The environmental impact of mining and refining operations is often high, which has contributed to India’s almost nonexistent capacity in these fields. The government has stated that it will facilitate or participate in 1200 exploration projects under the National important Mineral Mission, provide exploratory licenses to encourage private exploration, and put additional important mineral blocks up for auction.

Model Question:

Examine the strategic significance of Rare Earth Elements (REEs) in the context of India’s economic and national security interests. What are the challenges India faces in harnessing its REE potential, and how can they be addressed?

Model Answer:

Rare Earth Elements (REEs) refer to 17 chemically similar elements critical to high-tech industries, defense systems, and green technologies like electric vehicles, wind turbines, and smartphones. Despite their name, REEs are relatively abundant but difficult to extract economically.

Strategic Significance:

1. Economic Importance: Essential for India’s push towards clean energy, digitalization, and Make in India. Key inputs for semiconductors, permanent magnets, and batteries.
2. National Security: Crucial for defense applications like missile guidance systems, night vision devices, and stealth technology. Reduces vulnerability to supply shocks, especially from China, which controls over 60% of global REE production.
3. Geopolitical Leverage: Control over REE supply chains is emerging as a strategic tool in global diplomacy.

Challenges for India:

1. Limited production and processing: Though India has 6th largest REE reserves, it lacks advanced refining and separation technology.
2. Environmental concerns: Mining and processing are ecologically damaging.
3. Monopoly of IREL: Limited private sector participation hinders innovation and investment.
4. Supply chain vulnerability: Heavy reliance on Chinese imports.

Way Forward:

1. Technological collaboration with countries like Australia, Japan, and the US.
2. Encourage private sector and FDI in REE mining and processing.
3. Invest in R&D and recycling of e-waste for secondary REE sources.
4. Formulate a comprehensive national REE strategy with a focus on sustainability.

REEs are indispensable for India’s economic growth and national security. A strategic approach that balances exploitation with environmental sustainability is vital to reduce external dependence and enhance India’s self-reliance in critical technologies.