Rare Earth Elements (REEs)

Why in News

The growing global demand for rare earth elements (REEs), essential for renewable energy and advanced technology, has spotlighted India’s need to reduce its dependence on China. Despite being the fifth-largest holder of rare earth reserves, India lacks advanced extraction technology, resulting in heavy reliance on imports, with around 60% sourced from China. Amid supply chain disruptions and security concerns tied to China’s dominance in the sector, India is exploring partnerships with other nations. In this context, Kazakhstan emerges as a significant alternative due to its rich reserves and India’s increasing strategic ties under initiatives like the Connect Central Asia Policy and the International North-South Transport Corridor (INSTC).

Relevance for UPSC

(GS Paper II- International Relations)

  • Geopolitical Strategy: Partnerships with Kazakhstan and Central Asian nations reflect India’s efforts to diversify critical mineral sources and reduce strategic vulnerabilities tied to China.

(GS Paper III – Economy, Environment)

  1. Economic Development:
    Rare earths are critical for achieving India’s renewable energy targets and enhancing its manufacturing sector, aligning with economic growth goals.
  2. Energy Security:
    Securing a reliable rare earth supply chain is essential for India’s transition to clean energy and reducing carbon emissions.
  3. Sustainable Development:
    Sustainable mining and extraction practices align with India’s broader environmental commitments.

Rare Earth Elements (REEs) and Their Importance

  1. Definition and Usage of Rare Earth Elements (REEs)
    Rare earth elements are crucial for manufacturing in critical sectors like:
    • Clean energy (e.g., wind turbines, solar panels, batteries).
    • Defence (e.g., military equipment, radars, and missiles).
    • Electronics (e.g., smartphones, magnets, semiconductors).
  2. India’s Challenges
    • India lacks sufficient technology to extract rare earths despite holding vast reserves.
    • Heavy reliance on China (60% of imports) exposes India to supply chain vulnerabilities.
    • The supply chain risks became evident with China’s recent export bans on technologies for extracting rare earths and producing magnets.

China’s Monopoly on Rare Earth Elements

  • Global Dominance:
    China controls over 70% of global rare earth production and uses this leverage for geopolitical and economic influence.
  • Recent Actions:
    • Halted supply of antimony, critical for renewable energy technologies and military uses.
    • Banned technologies essential for rare earth extraction and magnet production, citing national security.
  • Concerns:
    • Potential weaponization of rare earth exports, similar to previous disruptions.
    • India’s vulnerability due to reliance on Chinese supplies.

Kazakhstan as an Alternative for Rare Earth Elements

  • Resource Abundance:
    • Kazakhstan holds 15 of the 17 known rare earth elements, including dysprosium, scandium, and tantalum, critical for renewable energy and advanced technologies.
    • It is one of the world’s leading producers of beryllium, tantalum, and niobium, essential for clean energy and nuclear applications.
  • Strategic Importance:
    • Kazakhstan’s proximity to India and the strengthening of ties through the Connect Central Asia Policy and INSTC provide logistical advantages.
    • Kazakhstan’s growing rare earth extraction capabilities, supported by partnerships with countries like Japan, Germany, and South Korea, reduce India’s dependence on China.
  • Economic Potential:
    • Kazakh President Kassym-Jomart Tokayev has termed rare earths as the “new oil” for the country, highlighting their economic importance.
    • Investments in tungsten, battery materials, and magnets are enhancing Kazakhstan’s global role in rare earth production.

India’s Strategy for Rare Earth Elements Diversification

  1. Planned Increase in Mining Output:
    India aims to increase rare earth mining output by 400% over the next decade to reduce reliance on imports.
  2. Partnerships with Kazakhstan:
    • The India-Central Asia Rare Earths Forum, proposed during the India-Central Asia Summit, aims to foster bilateral collaboration in rare earth mining and processing.
    • Key initiatives include:
      • Bilateral training programs.
      • Joint mining ventures.
      • Sharing geological data and expertise.
      • Sustainable extraction practices.
      • Development of a regional rare earth market.
  3. Geopolitical Importance:
    • Diversifying rare earth imports from Kazakhstan, the U.S., and African nations enhances India’s resource security.
    • Reducing dependence on China aligns with India’s broader strategic goals of supply chain resilience and economic independence.
  4. Renewable Energy Goals:
    India’s commitment to achieving 500 GW of renewable energy capacity by 2030, under its COP29 pledge, underscores the importance of securing a reliable supply of rare earths like dysprosium, essential for clean energy technologies.

Challenges in Rare Earth Elements Collaboration

  1. Technological Gaps:
    Both India and Kazakhstan lack advanced extraction technologies for processing rare earths effectively.
  2. Connectivity Issues:
    Direct trade connectivity between India and Kazakhstan is limited, requiring further development under the INSTC.
  3. Global Competition:
    Countries like the U.S., Japan, and the EU are also investing in Kazakhstan’s rare earth sector, leading to increased competition.

Way Forward

  1. Investment in Technology:
    India needs to invest in advanced extraction technologies and processing capabilities to become self-reliant in the rare earth supply chain.
  2. Strengthening Partnerships:
    Collaboration with Kazakhstan should focus on creating a robust supply chain, fostering joint ventures, and addressing technology gaps.
  3. Sustainable Practices:
    Emphasis on sustainable and environmentally friendly extraction of rare earths will ensure long-term economic and ecological benefits.
  4. Regional Integration:
    The establishment of a regional rare earth market with Central Asian partners can reduce dependency on China while boosting economic ties in the region.
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