China Restricts Exports of Rare Earth Elements

 China Restricts Exports of Rare Earth Elements

Why in News China Restricts Exports of Rare Earth Elements? 

In April 2025, China imposed restrictions on the export of rare earth elements and magnetic alloys, significantly impacting global supply chains. This move has now affected India’s electric vehicle (EV) policy, causing disruptions in production and development.

What are Rare Earth Elements (REEs)?

• Introduction:

• • • The Rare Earth Element group consists of 17 key elements, including 15 lanthanides, along with scandium and yttrium, both vital for high-tech innovations.
    • These metals are widely available on the Earth’s surface, but their mining, refining, and separation are highly complex, making them expensive and strategically significant. 
    • These elements have distinctive chemical and physical traits, making them vital for powering today’s advanced technologies.
    • The continuous growth of electronics, green energy, military equipment, and high-tech industries is dependent on these metals.

• Global Distribution:

• • • Rare Earth Elements are found in many parts of the world, but their commercial mining and purification are concentrated in a very limited number of countries.
    • Currently, China is the world’s largest producer and supplier of rare earth metals. 
    • India possesses only 6% of the rare earth mineral reserves, which accounts for merely 1% of global production.

• Significance:

• • • Industrial Importance: Rare Earth Elements have become the foundation of today’s technological world. Their use is essential in the manufacturing of devices such as mobile phones, laptops, TVs, smart devices, electric vehicles, and wind turbines. 
      • Among these, elements like neodymium and praseodymium are used in the creation of powerful magnets, which are incorporated into electric motors and generators.
    • Energy and Defense Sectors: Elements such as lanthanum, yttrium, and gadolinium are utilized in nuclear reactors and high-capacity batteries.  
      • Their application extends to missile guidance systems, radar, combat aircraft, and communication equipment.

• Environmental Crisis:

• • The mining of rare earth metals involves complex chemical processes that lead to the generation of toxic gases, radioactive waste, and water pollution. This mining profoundly impacts the environment and causes damage to local ecosystems.

China’s Dominance in the Global Rare Earth Market:

• Most of the mining and processing of rare earth elements globally is controlled by China. 
• Currently, China contributes around 60% of the world’s total rare earth element production, maintaining a leading role.
• China has developed state-of-the-art technology in this sector, enabling it to produce high-quality rare earth products at low costs and export them worldwide. 
• China’s extensive network makes it a central hub in this sector, without which many major industries globally would be affected.
• The Chinese government prioritizes the rare earth industry as a pillar for both national defense strategy and economic development.
  • For this reason, it has implemented policies of continuous investment, technological research, and stringent industrial control in this industry. 
• Several critical branches of today’s global economy are dependent on rare earth metals supplied by China. 
• China’s strong hold on the global rare earth market provides it with effective control not only over production but also over pricing and export sectors. 
• China’s export restrictions and policy decisions lead to price fluctuations in the global market, forcing many countries to adjust their technological and industrial strategies.

Why did China decide to restrict the export of rare earth metals?

• Geopolitical Strategy: The escalating trade and political tensions between China and Western countries, particularly the United States, have prompted China to strictly control its rare earth exports. Through export restrictions, China not only strengthens its military equipment and energy resources but also enhances its effectiveness in international diplomacy. This move protects China from price declines in international markets and helps it gain dominance in pricing.
• Economic Priorities: The Chinese government’s policies focus on limiting the export of raw rare earth materials to promote domestic production and technological development. Through this strategy, China develops high-value industrial units within its own country that utilize rare earth metals essential for electric vehicles and renewable energy projects. 
• Regulatory Aspects: The process of rare earth mining is extremely harmful to the environment, involving the production of toxic waste and pollution of water sources, which also damages soil quality. Imposing export controls provides China with an opportunity to implement sustainable and environmentally friendly management in its mining areas. Through this policy, the government aims to align mining activities with environmental protection, while also promoting the development of green production technologies.

Impact of China’s Rare Earth Export Restrictions on India

• India’s push for electric mobility now faces a serious obstacle, as China’s curbs on REE exports threaten the supply of essential components.
  • These rare earth materials, including alloys and magnets, are mandatory for the manufacturing of electric vehicles. 
• India is actively promoting its electric mobility development with government incentives and funds allocated in Budget 2025 to accelerate growth in this sector, but China’s policy is impacting India’s plans.
• India is completely dependent on imports for the rare earth magnets essential for electric vehicles. Permanent magnets, made from rare earths, are essential for the core functioning of EV motors.
• According to the Economic Survey, in fiscal year 2025, India imported approximately 870 tons of rare earth magnets at a cost of ₹306 crore, which indicates that India’s domestic production capacity is not yet capable of meeting this demand.

India’s Current Policy for Rare Earth Elements (REEs)

• Exploration System: 
  • In India, the exploration of Rare Earth Elements is primarily conducted by the Geological Survey of India (GSI) and the Department of Atomic Energy (DAE). 
  • These institutions are authorized to identify and evaluate new reserves across the country. 
  • India has set a national target to carry out 1200 rare earth exploration projects between 2024–25 and 2030–31 to strengthen domestic resources.
  • This aims to better understand the status of rare mineral resources in the country and take concrete steps towards their utilization.
• Mining and Processing: 
  • Currently, the responsibility for mining and processing of Rare Earth Elements in India lies with Indian Rare Earths Limited (IREL). This public sector undertaking primarily extracts materials from sand-based minerals like monazite, which are found especially in coastal states. 
  • IREL is currently focused on the upstream process, meaning it only produces preliminary REE oxides, while advanced downstream work such as metal extraction and magnet manufacturing is still carried out by foreign companies.
• Policy: 
  • Under the amendments made to the ‘Mines and Minerals (Development and Regulation) Act, 1957’ in 2021, the government has given a new direction of transparency and competition to the mining sector. 
  • According to this, no mine will now be reserved for a specific purpose, which will provide opportunities for private sector entry and investment.
• Policy Changes: 
  • The government is considering adopting a PPP (Public-Private Partnership) model to attract private investment in rare earth processing technology. Through this model, efforts will be made to bring advanced technology, capital, and efficiency onto one platform. 
  • The government is working on a plan to create a strategic reserve to deal with potential disruptions in the global supply chain. 
  • The Indian government is also considering the formation of a separate department that will holistically manage all aspects of rare earth metal exploration, exploitation, refining, and regulation. 

The government recently launched the National Critical Minerals Mission, whose objective is to ensure a long-term secure supply of essential minerals.