By Er. Rajesh Pathak
Once it was crude oil alone. Now, critical minerals have joined it as a key resource for any country striving to stand economically sovereign in the world. Wherever manufacturing is essential—such as in wind turbines, electric generators, electric vehicles, aircraft engines, and cars—a magnet is needed. And if a magnet is needed, rare earth minerals are indispensable. These are a subset of critical minerals, of which magnets are made.
Today, China leads the world in critical minerals, owning 42 million tons. More notably, it supplies 90% of the world’s processed rare earth minerals. However, China sources much of this not from its own land, but from South America—particularly Argentina, Chile, and Bolivia.
To understand this better, consider the example of crude oil in the Middle East. Initially, British companies like British Petroleum (BP) and Enron were the first to explore and extract oil and gas. Later, by 1931, the US and other Western countries joined the race. But after 1951, major oil-rich nations like Iran and Iraq nationalized their oil industries, leaving little room for Western players.
Today, however, the energy landscape is shifting toward greener alternatives. Beyond magnets, this green transition requires solar cells and batteries—both dependent on critical minerals like lithium. Just as the Middle East has long enjoyed influence in the crude oil sector, South America now holds sway over critical minerals. While the world is only now waking up to this reality, China moved long ago. Having established robust infrastructure for exploration and processing, China has become the largest exporter of rare earth minerals.
India, notably, possesses a significant reserve of critical minerals—around 7 million tons—making it the 5th largest globally after Russia. The US, by contrast, holds merely 2% of the world’s reserves. Exploration is currently underway in India, and estimates suggest that reserves could surpass 15 million tons. However, at present, India relies on imports from China. Why? Because the sector was so far controlled by the public sector unit, India Rare Earths Limited (IREL). And, as many would agree, government PSUs often function with lethargy and limited accountability.
With the ongoing tariff war between China and the US, Beijing has begun using critical minerals as a strategic weapon. No country, including India, can afford to remain dependent on China. Meanwhile, India’s domestic demand is rising sharply with expanding industries. Last year, India required 4,500 tons, but IREL produced only a few hundred tons.
To address this, India launched a ₹1,000 crore Production-Linked Incentive (PLI) scheme, aimed at breaking the PSU monopoly and involving private sector participation. In Rajasthan’s desert, critical minerals are reportedly abundant, yet deep exploration has not been initiated—largely because it was the domain of the public sector. This bottleneck is now set to break under the leadership of IT Minister Ashwini Vaishnaw. The private sector will now tap this potential, with five companies said to have received the go-ahead for extraction.
Moreover, Australia holds 6 million tons of rare earth minerals. India has signed agreements with it for joint efforts in processing and manufacturing final products. Currently, India exports crude rare earth minerals to Japan, which processes them. Japan could be an alternative to China for imports, although it may cost more. Another option for Indian companies is to import components embedded with magnets, but that would undermine the Make in India programme by discouraging local manufacturing.
In a major development, rare earth minerals like Scandium and Strontium have been found in coal mine waste—once considered just a mountain of debris. The global demand for these elements is only 15–20 tons annually, as they are used in small quantities in high-value applications such as aerospace, fuel cells, and magnets. These minerals are lightweight, strong, and highly expensive.
Similarly, exploration has now started near other mineral sites such as iron, copper, and crude oil mines to locate rare earth elements. Where such minerals have been found, extraction is scheduled to begin as early as August.
