When giants fight it out, the rest have to ensure that they don’t get trampled over in the slugfest. That is the not-so-envious situation that India is faced with as the battle over rare earth minerals reaches a new paradigm.
But to give it credit, New Delhi is trying. Trying hard.
For context, China dialled up its sheer dominance in the rare earths sector into a strategic powerplay last week when it placed additional restrictions on its export—countries could not get them for military or intelligence use.
And this, of course, set the stage for another round of tariff tirade from the US, with President Trump threatening to impose 100 per cent tariffs on imports from China into the US if the People’s Republic did not see reason.
Rare earth magnets are important
If you still don’t know what the big deal is with rare earths, these are critical for big-time tech applications for anything from the batteries that run electric vehicles to smartphones to solar panels. And if that does not make them indispensable, by now you would have figured out they have further, critical applications in defence and intelligence systems, powering guided missiles, improving the efficiency of fighter jets and submarine hardware and used in laser systems and radars.
China dictates terms
Now, the reason why China is calling the shots in the scenario is also pretty interesting. While China has just about more than half of the total rare earth deposits in the world, its stranglehold on the scene stems from the fact that it has the most advanced technologies related to rare earths—more than 90 per cent of its refining is done in China. So the reality is that even when mined in places like Myanmar, for example, they are transported to China for processing before they are ready for use in electric car batteries and the like.
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Net result: China can dictate when it comes to rare earths, and China does dictate! In fact, when Trump came out with his first round of tariffs on April 2, which everyone interpreted as a salvo against Beijing in particular, though it was aimed at all of America’s significant trading partners, it surprised everyone that both countries quickly reached a rapprochement in just a month’s time.
Though details have not been revealed on how the two countries arrived at an agreement, it is believed that it was based on agreeing to exchange the two much-in-demand items that either country had and the other needed: the US had AI chips, which China desperately wanted, while China had rare earths that the US wanted. Quid pro quo!
That truce now lies in tatters, and it remains to be seen whether Washington and Beijing will be able to rework that earlier magic in time for the August 1 deadline that the US president has set.
India caught in between
Meanwhile, India is at a loss. Even before matters reached a head this month, China had started tightening the noose, with export clearances required for Indians wanting to import lithium and crucial rare earths from the mainland.
Now, with the new rules restricting military usage, it is clear that the process will get stringent further, with every batch being imported into India undergoing further scrutiny.
The Indian government is doing what it can. It launched a National Critical Minerals Mission earlier this year, and recently called on the private sector to chip in for a National Critical Mineral Stockpile.
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And it has been trying for trade agreements and better relations with South American nations with known reserves. Additionally, recycling of existing batteries once they reach end-of-cycle will be much more intensive.
Will that be enough? India imported more than 2,200 tonnes of rare earth metals last year; this requirement is set to at least double by the end of this decade. With the kind of aspirations that India seems to have, a lot more will need to be done.
