Indian government directs state miner to halt 13-year agreement with Japan to conserve domestic supplies amid China's export restrictions
16 Jun 2025 | 1765 Views | By Angitha Suresh
India has asked state-run miner IREL to suspend a 13-year-old agreement on rare earth exports to Japan and to safeguard supplies for domestic needs, two sources familiar with the matter told Reuters. The decision represents a shift in India's resource strategy as global competition intensifies for rare earth materials essential ...
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India has asked state-run miner IREL to suspend a 13-year-old agreement on rare earth exports to Japan and to safeguard supplies for domestic needs, two sources familiar with the matter told Reuters. The decision represents a shift in India's resource strategy as global competition intensifies for rare earth materials essential to high-technology manufacturing.
Indian Commerce Minister Piyush Goyal asked IREL to stop its exports of rare earths, mainly neodymium, a key material used in magnets for electric vehicle motors, according to one source. The move comes as China has restricted its rare earth exports since April, creating supply chain pressures for automakers and technology manufacturers worldwide.
Under the 2012 bilateral agreement, IREL has supplied rare earths to Toyotsu Rare Earths India, a subsidiary of Japanese trading company Toyota Tsusho. In 2024, Toyotsu shipped more than 1,000 metric tons of rare earth materials to Japan, representing one-third of IREL's total production of 2,900 tons. The processed materials are used primarily for manufacturing industrial magnets in Japan.
The suspension reflects India's broader strategy to develop domestic rare earth processing capabilities, a sector currently dominated by China. IREL has been exporting rare earths due to a lack of domestic processing capacity, but following the recent disruptions to supplies of Chinese material it wants to keep its rare earths at home and expand domestic mining and processing, a second source said.
China controls approximately 60 percent of global rare earth production and processes nearly 90 percent of the world's supply, including materials imported from other countries. This dominance has enabled Beijing to use rare earth exports as leverage in trade disputes, with the latest restrictions targeting 17 rare earth processing technologies.
India possesses substantial rare earth reserves, with deposits estimated at 6.9 million tons according to U.S. Geological Survey data. However, the country contributes less than one percent of global rare earth production and lacks advanced separation and refining technology compared to China, the United States, and Japan.
IREL is currently seeking statutory clearances for four new mines as part of its expansion plans. The company is also searching for corporate partners to establish rare earth magnet production facilities for the automotive and pharmaceutical industries. India has announced plans to offer incentives to companies willing to establish rare earth processing and magnet manufacturing operations to meet domestic demand.
The export suspension could face implementation challenges since the shipments are governed by a binding intergovernmental agreement between India and Japan. Japan, while heavily dependent on China for rare earth supplies, has used Indian materials as a strategic alternative source.
The development occurs amid broader efforts by multiple countries to reduce dependence on Chinese rare earth supplies. The United States has committed over $439 million since 2020 toward building domestic supply chains, while Australia, Brazil, and other nations are developing their own rare earth mining and processing capabilities.
Neither the Indian Commerce Ministry, IREL, nor the Department of Atomic Energy, which oversees IREL, responded to requests for comment. Toyota Tsusho and Toyotsu also did not immediately respond to requests for comment.