Why in News:
- China threatened to stop exporting Rare Earth materials to the US amid the ongoing trade war between the countries.
What are rare earth elements?
- The rare earth elements (REE) are a set of seventeen metallic elements. They are called ‘rare earth’ because earlier it was difficult to extract them from their oxides forms technologically.
- They are an essential part of many high-tech devices. The 17 Rare Earths are cerium (Ce), dysprosium (Dy), erbium (Er), europium (Eu), gadolinium (Gd), holmium (Ho), lanthanum (La), lutetium (Lu), neodymium (Nd), praseodymium (Pr), promethium (Pm), samarium (Sm), scandium (Sc), terbium (Tb), thulium (Tm), ytterbium (Yb), and yttrium (Y).
Why are they important?
- Rare earth minerals are crucial to the manufacture of magnets used in industries of the future, such as wind turbines and electric cars.
- And they are already being used in consumer goods such as smartphones, computer screens and telescopic lenses.
- REEs are needed in high-temperature superconductivity, safe storage and transport of hydrogen for a post-hydrocarbon economy, reduce sulphur oxide emissions and hence it has abundant value.
Who is the top producer?
- China accounts for more than 90 percent of world production.
- In 2019, the U.S. imported 80% of its rare earth minerals from China
- The EU gets 98% of its supply from China
- Amid the transition to green energy, in which rare earth minerals are sure to play a role, China’s market dominance is enough to sound an alarm to any developing/developed country due to the coming of age of high end manufacturing- 4th industrial revolution.
What is India’s position?
- India has the world’s fifth-largest reserves of rare earth elements, nearly twice as much as Australia, but it imports most of its rare earth needs in finished form from China.
- With adjustments to the existing policy, India could emerge as a rare earths supplier to the world and use these resources to power a high-end manufacturing economy
- The Indian REE industry could potentially net a capital employment of about Rs 121,000 crore, including Rs 50,000 crore worth of foreign exchange.
India’s Current Policy on Rare Earths
- Exploration in India has been conducted by the Bureau of Mines and the Department of Atomic Energy. Mining and processing has been performed by some minor private players in the past, but is today concentrated in the hands of IREL (India) Limited, a Public Sector Undertaking under the Department of Atomic Energy.
- India has granted government corporations such as IREL a monopoly over the primary mineral that contains REEs: monazite beach sand, found in many coastal states. Processed minerals usually take the form of a rare earth oxide (REO), which then needs to be converted into a pure metal before it can be used to manufacture anything.
- IREL produces rare earth oxides (low-cost, low-reward “upstream processes”), selling these to foreign firms that extract the metals and manufacture end products (high-cost, high-reward “downstream processes”) elsewhere.
How can India be a global player?
- Create a new Department for Rare Earths (DRE) under the Ministry of Petroleum & Natural Gas, drawing on its exploration, exploitation, refining, and regulation capabilities
- DRE should oversee policy formulation and focus on attracting investment and promoting R&D, with its first move being to allow private sector companies to process beach sand minerals within appropriate environmental safeguards.
- To maximise the REE production
- DRE could secure access to REEs of strategic importance by offering viability gap funding to companies to set up facilities in the upstream sector. This could make Indian REOs globally competitive.
- Focus on downstream processes and applications, such as manufacturing rare earth magnets and batteries. This would require a focus on port infrastructure and ease of doing business measures to allow Indian manufacturers to import REOs from white-listed producers cheaply.
- Coordinate with other agencies to partner directly with groupings such as the Quad, building up a strategic reserve as a buffer against global supply crises.
- With adjustments to the existing policy, India could emerge as a rare earths supplier to the world and use these resources to power a high-end manufacturing economy geared to the needs of the 21st century.