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Rare Earth Elements – Chinese Intransigence a Midas Touch which could turn Indian Sand into Gold

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Chinese Monopoly over Rare Earth Elements has Foreign Governments worried

Rare Earth Elements (REE) have become a hot media top with the unofficial Chinese export embargo to Japan.REEs are crucial raw materials for a wide range of industries in the Green and Defense Sectors.The Chinese monopoly over the production and supply of these commodities have made EU and  USA thinking of taking the WTO route.However this had not detered China from clamping down on the production and exports.China wants to use these minerals as a strategic resource to force Green companies to relocate to China and transfer hard to get technologies to local Chinese companies.Note while EU and USA are looking to export Green Product to China,the government there has shrewdly only given permissions to companies willing to transfer technology.

Can India take Advantage to become a Leading Supplier

Rare Earth Element Deposits are found in many places in the world but due the Chinese undercutting of prices and lax environmental regulations had all but shuttered every mine in the non-Chinese geographies.Recent Chinese moves have opened up oppurtunities for REE mines as prices have increased by almsot 5-10x in the last few months.Lynas Corp is opening up a mine in Australia while Molycorp is reopening its mine in Mountain Pass,Californa.India also has a long history of production and export of REE . However its production of around 2500 tons is only  2% of the estimated Chinese yearly production of 130,000 tons.

India has around 5 million tons of monazite according to GSI from which REE are extracted.This mineral is found in the sands of Kerala and Orissa.India  produce around 2500 tons a large part of which is exported.Indian Rare Earth Limited (IREL) is the government owned company responsible for mining and processing of REE.IREL comes under the control of Department of Energy as monazite sands have a high concentration of thorium which India hopes to use a nuclear fuel in the future through properietary technologies.

Orissa Sands Complex ( OSCOM) is supposed to have huge deposits of rare element minerals.It has a 220,000 ton processing capacity which is expected to be expanded to 500,000 tons.Toyota has already been trying to partner with OSCOM to buy the REE mined there.This place  has 86 million tons of mineral sands reserves though rare earth minerals would reserves would be much lower.

Japan and India tie up for cooperation in Rare Earth Elements

Japan has been frantically looking for altnerative sources of REE to reduce its dependence on China.It has been scouting Vietnam and Kazakhstan for REE.India appears to be a good source as well considering the political and economic stability.India and Japan have signed an agreement to increase cooperation in this area.While India gets Japanese technology for extraction and refining ,Japan will get these raw materials.

Summary

India has the golden opportunity to become a large supplier of REE as it as huge deposits in Orissa which remain unexploited.In the past India faced problems because of its lack of technology for REE processing and low prices caused by the Chinese.But now with REE become a precious commodity,India can looks towards desperate buyers like Japan for technology and exports .It will be a case of the Midas Touch where Monazite Sands of India will be converted into gold.

More on this topic (What's this?)
China Transformation or Bust
Read more on Investing in China, Rare Earth Metals at Wikinvest
PG

Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to greensneha@yahoo.in or call me on +913340606492.

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One Response so far | Have Your Say!

  1. Satyendra

    Very good Article , this is what I was looking for.

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