Tata Motors Undeterred by China's Limited Exports of Rare Earth Elements; India Considers Strategic Alternative for Production and Distribution Chains
India, with the world's third-largest reserves of rare earth minerals, estimated at around 6.9 million tonnes, is making strides to reduce its reliance on Chinese imports. State-run Indian Rare Earths Ltd (IREL) currently handles most of the extraction of these minerals, prioritising supply for the atomic energy and defence sectors.
However, IREL has announced plans to partner with Japanese and South Korean companies for the production and processing of rare earth magnet materials. The aim is to reduce dependence on Chinese imports, as IREL seeks technology for rare earth processing and plans to begin commercial magnet production soon.
The Indian government's initiatives reflect this goal. The Ministry of Heavy Industries has drafted a production-linked incentive (PLI) scheme specifically for rare earth magnet manufacturing. Under this scheme, funding will be provided to cover the gap between domestically produced and imported magnets, encouraging local production and aiming for price parity.
The Indian government has also launched the National Critical Mineral Mission to accelerate exploration and commercial utilisation of rare earth elements such as neodymium. This mission is part of a larger effort to bolster domestic output of rare earth minerals, with several new projects underway.
Meanwhile, Tata Motors, India's largest electric vehicle manufacturer, has stated that its operations remain unaffected due to China's tightening grip on rare earth metal exports. Tata Motors is progressing towards a demerger that will result in two independently listed entities, one dedicated to commercial vehicles and the other to passenger vehicles, including its electric vehicle division.
Tata Motors is working to expand its electric bus portfolio under the government-backed PM e-Bus Sewa scheme. The company has also laid out an ambitious target of achieving 30% EV penetration in its passenger vehicle segment by 2030.
In response to the global trend towards alternative propulsion technologies, Tata Motors is developing hydrogen-powered trucks. This move is part of a broader transition strategy that includes securing alternate sources for rare earth elements. Tata Motors has been proactively reinforcing its resilience against potential geopolitical and trade disruptions.
Tata Sons Chairman N. Chandrasekaran confirmed that Tata Motors has maintained stable supply lines and strategic inventories, with no disruptions reported. This reassurance comes at a time when China, which accounts for roughly 36% of the global mining of rare earth elements and processes close to 90% of these minerals, effectively wields substantial influence over global supply.
As India moves towards self-reliance in critical mineral resources, the partnership between IREL and foreign companies, the PLI scheme, and Tata Motors' strategic moves are significant steps towards reducing India's reliance on Chinese imports. These initiatives underscore India's commitment to becoming a key player in the global rare earth market.
