 "Workers transport soil containing rare earth elements for export at a port in Lianyungang, Jiangsu province, China, October 31, 2010. File Image/Reuters")
Are rare earth materials the new oil?
India is planning on building a strategic stockpile of rare earth materials. The development comes amid concerns about the global supply of rare earth materials after China imposed import controls. Beijing controls more than 80 per cent of the world’s rare-earth refining facilities.
New Delhi isn’t alone. US President Donald Trump had responded by imposing 100 per cent tariffs on China, saying it could not be allowed to hold the world captive.
“Our relationship with China over the past six months has been a very good one, thereby making this move on trade an even more surprising one,” Trump said. The Pentagon has also increased its stockpiling of critical rare earth minerals.
But what do we know? And what are rare earth materials?
Let’s take a closer look
What do we know?
The Centre will be launching the National Critical Mineral Stockpile (NCMS) soon. Officials have said this is a dedicated scheme aimed to ensure the availability of rare earth elements in the country. The Centre wants to create a stockpile of such critical materials.
“We are looking to create a two-month stockpile of rare earth elements under the programme, with a focus on private player participation,” a senior government official told Economic Times on condition of anonymity. “The initial focus is on rare earth elements. The scope will later expand to include other critical minerals.”
It has set aside Rs 500 crore under the NCMS in order to “guard against supply disruptions and ensure mineral availability for domestic use”.
At this moment, most of India’s rare earth materials will stop—this is because its technological ability to extract these resources from the Earth remains limited. India currently has 7.23 million tonnes of rare earth oxide locked across 13.15 million tonnes of monazite.
This is in states such as Andhra Pradesh, Odisha, Tamil Nadu, Kerala, West Bengal, Jharkhand, Gujarat and Maharashtra. The Centre has thus far conducted five tranches of auctions of nearly five dozen critical and strategic mineral blocks – and has scheduled a sixth. Of these, nearly three dozen blocks have been granted.
This programme would be on the lines of India’s strategic oil reserve , which India has, like many other countries. India, which requires around 5.5 million barrels per day of oil, currently imports nearly 80 per cent of its requirements.
India’s strategic oil reserve
India earlier this year said it is planning to boost its strategic oil reserve.
State-run engineering consultancy Engineers India Ltd is doing feasibility studies to build the new reserves, Indian Strategic Petroleum Reserve Ltd’s CEO L.R. Jain said.
“In case of exigencies, we will be better prepared,” he added.India currently has strategic petroleum reserves at three locations—Mangalore, Padur and Vizag—in southern India to store up to 5.33 million tonnes of crude that could be tapped in the case of supply disruptions.
It plans to create a new 5.2–5.3 million tonne reserve at salt caverns at Bikaner in the desert state of Rajasthan, and a 1.75-million tonne facility at Mangalore in southern Karnataka state, he said.
Pentagon stepping up stockpile
The Pentagon, meanwhile, has responded to China’s export controls by looking to snap up over $1 billion (Rs 88.68 billion) worth of rare earth materials. The plan was made public by the US Defense Logistics Agency (DLA), which manages the national stockpile, in its recent filings.
The Pentagon is relying on money from Trump’s ‘Big Beautiful Bill’, which was passed by Congress recently. It had allotted $7.5 billion (Rs 665.1 billion) for critical minerals. Of this sum, $2 billion (Rs 177.36 billion) will go to increasing the national defence stockpile by 2026–27. Meanwhile, $5 billion (Rs 443.4 billion) will go toward fortifying supply chains, and another $500 million (Rs 44.34 billion) will back a new credit scheme to attract private players.
The DLA wants to buy rare earths, tungsten, bismuth, and 222 tonnes of indium alone, which is almost the US’s refined consumption for an entire year. Experts say there may simply not be enough rare earth minerals to go around. They caution that these mass purchases could further constrict the supply of non-China rare earth materials and increase prices even further.
Rare earth materials and why they matter
Rare earths are a group of 15 elements in the periodic table. Collectively, they are known as the Lanthanide series. They can be separated into two groups – light rare earths and heavy rare earths. The latter comprise lanthanum to samarium, while the former comprise europium to lutetium.
While they are found in relative abundance in the Earth’s crust, they are not found in the capacity needed to mine. They have been labelled rare earths because of their scarcity. However, these minerals are extremely important.
They are used to make anything from smartphones, electric windows, power steering and catalytic converters in cars to aircraft engines and military radars. A single smartphone, for example, comprises eight separate rare earth materials. They are also used in robotics, home automation and green technologies such as hybrid and electric vehicles and wind turbines.
China has said it will add five more rare earth elements and related materials to its export controls list. Exports of 12 of them are now restricted after the Ministry of Commerce added five – holmium, erbium, thulium, europium and ytterbium – along with related materials.
The latest five are silvery in colour and can be used in various applications including the nuclear, defence, medicine and fibre-optics sectors. Holmium can be used in magnets, semiconductors, laser surgery devices and control rods for nuclear reactors. Erbium is mostly used in fibre-optic telecommunications and infrared technology. Pink-coloured erbium oxide is used to make infrared-absorbing glass.
Thulium is used in X-ray equipment, laser technology and ceramic materials in microwaves. It is fluorescent when exposed to ultraviolet light, making it useful to combat counterfeiting. Europium, the most reactive rare earth element and also fluorescent, is used in control rods for nuclear reactors and glowing materials including for medical imaging.
It is also used in magnetism research, alongside ytterbium. Ytterbium, the most volatile rare earth element, can be used as a radiation source in X-ray machines and has applications in nuclear medicine. It is also used as a catalyst and in quantum computers.
China hits back
China hit back at the US, saying that its export controls on rare-earth elements followed a series of US measures since bilateral trade talks in Madrid last month. Beijing cited the addition of Chinese companies to a US trade blacklist and Washington’s imposition of port fees on China-linked ships as examples.
“The US actions have severely harmed China’s interests and undermined the atmosphere of bilateral economic and trade talks, and China is resolutely opposed to them,” the ministry said.
Beijing stopped short of explicitly connecting these US actions to its export curbs on rare-earth elements, saying they were motivated by concern about these materials’ military applications at a time of “frequent military conflicts”.
With inputs from agencies