By Venus Upadhayaya

India’s contemplating halting the export of rare earth minerals to Japan. News reports last week describe it as a move to secure domestic supplies and to reduce dependence on China that launched restrictions on seven rare earth elements and finished magnets in April. An expert described it as a major change in India’s trade approach.

Dr. Nishakanth Ojha, Honorary distinguished fellow at the New Delhi based Centre for Joint Warfare Studies told the Indo-Pacific Politics in an exclusive interview that India seeking magnets in exchange of rare earths from Japan is different from how India acted before. 

“Traditionally, India shipped unprocessed rare earth minerals such as Lanthanum and Cerium to Japan, where they were refined into essential components like Neodymium magnets. These magnets are critical for electric vehicles, defense systems, and renewable energy technology,” said Ojha. 

India has a growing desire to build its domestic capacity to manufacture magnets, according to the expert who said New Delhi is encouraging Japan to either invest in India and build manufacturing facilities or to export magnets to India.

“The move also aligns with global shifts triggered by the US-China trade conflict. With China dominating over 70 percent of rare earth production and more than 90 percent of processing, many countries are actively seeking alternative supply chains. India’s rare earth reserves, along with its closer strategic ties to the West, make it an attractive partner,”  said Ojha. 

Media Reports

India’s state-run Indian Rare Earth Limited (IREL) India Limited, under its Department of Atomic Energy has been asked to suspend a 13-year-old agreement on rare earth mineral exports to Japan, according to a Reuters report published on June 16 that quoted anonymous Indian sources. Indian media, Business Standard (BS) also reported the same, again quoting two anonymous sources but added that India can retain the exports if it gets something in return.

“There has been a request to potentially stop exports to Japan, but we have a long-term G2G agreement. So, we will possibly put some constraints. If we are exporting rare earths to them, they should give something back. This is just a way for us to reset the arrangement,” one of the two anonymous sources told Business Standard.

The media said the development has happened amidst the uncertain supply of magnets from China to India while the domestic inventory in the country is depleting–the Indians are thus seeking magnets from Japan in return for its rare earth exports . A spokesperson of the Japanese embassy in New Delhi told BS that the embassy is discussing the matter with the Japanese government.

India has the capacity to exploit its rare earth resources (Light rare earths) only up to metal extraction and according to a written reply to a question at India’s upper house of the Parliament, Rajya Sabha on 6 April 2023, the country started collaborating with Toyotsu Rare Earths India Limited, Visakhapatnam, a subsidiary of Toyoto Tsusho Corporation, Japan to refine rare earths by sourcing rare earth concentrate from IREL.

India is currently relooking at this agreement with Toyoto Tsusho Corporation.

Threat of Rare Earth Wars

Since the United States and China have started using export control as a geo-economic weapon and as a result a new tension and battle is ensuing in the global supply chains–it’s very imperative that India identifies and secures its interests, according to the expert. 

“China’s decision in April to restrict exports of seven rare elements and related magnets appears to be a clear strategic response to escalating tensions in the US-China trade war,” said Ojha.

He said by putting limitations on the exports of rare earths and magnets, China is making critical technology a key bargaining chip in the broader geopolitical contest.

“These materials are vital for defense systems, semiconductors, and clean energy technologies—sectors where the U.S. and allies are actively trying to reduce dependence on China. By tightening control over these critical resources, China is signaling its leverage in the global supply chain,” said Ojha.

India has the fifth largest supply of rare earth elements but continues to rely on imports, particularly from China because of a lack of a domestic system for mining, processing and production. The Indian reserves also contain more of Light Rare Earth Elements (LREE) and Heavy Rare Earth Elements (HREE) are not available in extractable quantities.

The LREEs are cerium, lanthanum, praseodymium, neodymium, promethium, europium, gadolinium and samarium and the HREEs are dysprosium, yttrium, terbium, holmium, erbium, thulium, ytterbium, yttrium and lutetium.

Out of the LREEs, Neodymium and Praseodymium are the most significant because they both are used in creating permanent magnets. Neodymium is also used to make mobile phones, electric cars while Praseodymium is used in alloys to make aircraft engines. The HREEs like Dysprosium are used in magnets and also in the development of clean energy technologies.

Ojha said India’s new stance aims to increase “economic value, support self-reliant manufacturing, and secure access to materials vital for its technological and defense ambitions.” India’s decision is in interest of its national security, he emphasized.