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Eye on China, India and Japan look at rare earth minerals

China had imposed export restrictions and raised tariffs in 2010 as it sought higher prices for rare earth which is used for both civilian and military, including nuclear, applications.

Written by Anil Sasi | New Delhi | Updated: May 18, 2015 7:12:17 am
Narendra Modi, China, Modi China visit, Modi in China, India China relations, Prime Minister Narendra Modi, left, shakes hands with Chinese Premier Li Keqiang during a press conference at the Great Hall of the People in Beijing, China. (Source: AP)

Even as Prime Minister Narendra Modi’s overarching message during his recently concluded China tour was that of ramping up the level of engagement between the two countries, a strategic collaboration between India and Japan for the production of rare earths, floated primarily to counter the Chinese hegemony in this sector, is set to break fresh ground. Rare earths are crucial due to usage in most modern technology items ranging from smartphones and laptops to avionics and defence equipment.

State-owned Indian Rare Earths Ltd (IREL) and Toyota group firm Toyota Tsusho Corporation are learnt to have finalised the modalities of jointly harnessing mixed rare earth chloride — the starting commodity used to extract individual rare earths that can be used for both civilian and military, including nuclear, applications.

The pact marks a first step towards commercialising the Indo-Japanese partnership, which aims to counter the overwhelming dominance of China — a country that currently meets about 95 per cent of the world’s rare earth needs. The venture also marks India’s re-entry into the production of rare earths, nearly a decade after it stopped production in 2004 due to lack of market competitiveness. The IREL-Toyota Tsusho partnership is also significant considering that the world’s only non-Chinese producers of rare earths are Australia’s Lynas Corp and US firm Molycorp.

According to a senior Department of Atomic Energy (DAE) official, a crucial pact for fixing the price of mixed rare earth chloride for supply to TTC’s plant in Andhra Pradesh from IREL’s plant at Odisha is nearly ready and is awaiting approval by the Cabinet Committee on Security.

The India-Japan venture is being viewed as crucial by both partners as China, in 2010, had curtailed its export of rare earth minerals, a move that triggered a sharp spike in rare earth prices and created a scare in the high-end electronics and defence industries in India, Japan and the US.

China had imposed export restrictions and raised tariffs in 2010 as it sought higher prices to help cover the environmental costs of production and tried to encourage the growth of domestic industries that use rare earths. Prices shot up as buyers scrambled to secure supplies, with Japan, EU and the US eventually filing a trade complaint.

The World Trade Organisation ruled last year that China’s restrictions were discriminatory and told it to scrap the quotas and export tariffs.

While China is reported to have relaxed its export ban earlier this year, both India and Japan are sticking to their resolve to push through with the partnership on rare earths amid continuing uncertainity over supplies from China, officials said.

It is under the framework of a broad agreement signed between the DAE and Ministry of Economy, Trade and Industry (METI) of Japan on co-operation in the field of rare earths in Novermber 2012 that both sides have fixed the terms of the proposed JV and finalised comprehensive details of technology sharing.

IREL, which is the only firm in India authorised to extract rare earths, had set up a 10,000 tonnes per annum (tpa) monazite processing plant at its unit in OSCOM, Odisha to produce about 26 tpa of nuclear grade ammonium di-uranate. IREL has retrofitted its facilities at Aluva, Kerala to process about 5,000 tpa of mixed rare earth chloride and to produce separated high pure rare earths. Further, IREL has entered into a MoU with the Bhabha Atomic Research Centre and the Defence Metallurgical Research Laboratory for developing technology to produce rare earth metals and magnets.

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