How China’s Rare Earth Export Restrictions Affect India

Source: Why did China block exports of rare earth elements? The Hindu, April 22, 2025

China has imposed export controls on key rare earth elements (REEs), disrupting global supply chains vital to sectors like semiconductors and defense. While India may not face immediate impacts, it is stepping up domestic efforts under the National Critical Mineral Mission to reduce dependence on imports and build long-term resilience in critical mineral supply chains.

Understanding Rare Earth Elements and Their Applications

Definition and Misconception: Rare earth elements (REEs) refer to a group of 17 naturally occurring metallic elements found in the earth’s crust. Despite their name, they are not scarce in quantity, but are difficult to extract and purify for industrial use.
Global Distribution: These elements are naturally present in various countries, including India, China, Myanmar, Japan, Australia, and North Korea, with China being a dominant player in the market.
Chinese Export Restrictions: China has imposed export limitations on seven specific REEs—dysprosium, gadolinium, lutetium, samarium, scandium, terbium, and yttrium—due to their strategic significance in modern technology.
Dysprosium – Magnetic Applications: Known for its high magnetic susceptibility, dysprosium is crucial in manufacturing car motors and hard drives.
Gadolinium – Nuclear and Medical Uses: Gadolinium plays a vital role in shielding within nuclear reactors and is also used in certain diagnostic medical devices.
Lutetium – Imaging and Refining: Utilized in PET scan technology and in chemical processes at petroleum refineries, lutetium is valued for its specific chemical properties.
Samarium – Electronic Magnets: Samarium is an essential component in high-strength magnets used in personal electronic gadgets.
Scandium – Aerospace Alloys: Scandium, when combined with aluminium, enhances the strength of alloys used in the construction of fighter jets.
Terbium – Lighting Technology: This element is used in the production of display lighting for various consumer electronics.
Yttrium – Medical and Superconducting Applications: Yttrium finds use in cancer treatment procedures and is also important in the development of superconducting materials.

China’s Dominance And India’s Options

China’s Refining Monopoly: Nearly all heavy rare earth elements (REEs) used worldwide are processed in China, giving it significant influence over global supply chains critical to electronics, defence, and other high-tech industries.
Leverage Without a Ban: Although China’s recent export curbs are not full prohibitions, they can still cause temporary disruptions as exporters navigate the permit system.
India’s Short-Term Impact Minimal: Current Chinese restrictions are unlikely to have an immediate effect on India’s supply chains due to its limited direct dependence on Chinese REEs.
Advanced Manufacturing Abroad: Despite India’s push to increase semiconductor and defence production, most high-tech manufacturing still takes place in other countries, especially China and Japan.
India’s Resource Base: With an estimated 6% of global REE reserves, India is aware of the strategic importance of developing its domestic extraction and refining capabilities.
Environmental Barriers: High environmental costs associated with mining and processing REEs have largely deterred India from developing significant refining infrastructure.
Existing Light REE Operations: India does have limited extraction capabilities for light REEs, such as monazite mined from beach sands in Kerala, managed by the state-owned Indian Rare Earths Ltd.
Import-Production Balance: In 2023–24, India imported 2,270 tonnes of REEs. Its long-term strategy hinges on expanding both domestic output and carefully managed imports.

🔍 Understanding Rare Earth Elements (REEs)

📘 What Are Rare Earth Elements?

Rare Earth Elements, or REEs, refer to a group of 17 metallic elements that include the 15 lanthanides along with scandium and yttrium. Despite the misleading term “rare,” these elements are relatively common in the Earth’s crust. However, they are rarely found in concentrated, economically viable deposits.

The full list includes:

Lanthanides: La, Ce, Pr, Nd, Pm, Sm, Eu, Gd, Tb, Dy, Ho, Er, Tm, Yb, Lu
Others: Scandium (Sc) and Yttrium (Y)

Cerium, for example, is more abundant than copper, yet the challenge lies in extracting these elements because they are typically dispersed within ores.

⚙️ Extraction and Market Challenges

One of the biggest hurdles with REEs is their extraction and separation. These metals naturally occur together, which means complex chemical processes are required to isolate each one individually. The market value of any given REE depends largely on demand, not its availability. So, some abundant elements go underutilized while others face supply pressure.

Adding to the challenge is the global supply imbalance—China dominates the industry.

🌏 China’s Dominance in the REE Supply Chain

As of 2023:

China: 69% of global REE ore production
USA: 12%
Myanmar (Burma): 11%
Australia: 5%
India: Ranks fifth in resources, mainly in monazite-rich sands

While several countries mine rare earths, China is the only nation with full refining capabilities. Even the U.S. and Australia often send semi-processed materials back to China for final purification.

China currently supplies:

85% of all purified light REEs
100% of all purified heavy REEs

India’s Policy Approach

National Critical Mineral Mission (NCMM): India has launched the NCMM as a strategic policy initiative aimed at securing a stable supply of critical minerals, including rare earth elements (REEs), by enhancing both domestic production and foreign procurement.
Broad Scope of Critical Minerals: Rare earth elements are part of a wider category known as critical minerals, which are essential for high-tech, defence, energy, and manufacturing sectors.
Exploration Push: The NCMM envisions facilitating or directly conducting around 1,200 exploration projects across the country to identify new sources of critical minerals.
Private Sector Participation: To stimulate private investment and interest, the government plans to issue exploratory licenses that will incentivize private companies to explore and develop critical mineral resources.
Mining Block Auctions: As part of its resource development strategy, India will auction additional blocks identified as having critical mineral potential to boost extraction and supply.