India Mulls Halt to Rare Earth Exports to Japan to Boost Domestic Conservation

The Indian government has asked Indian Rare Earths Limited (IREL) to suspend a long-standing agreement on exporting rare earth materials to Japan. This comes amid efforts to conserve critical minerals for domestic use and reduce reliance on Chinese imports, as per Reuters.

Existing Export Agreement

IREL has been exporting rare earths, primarily neodymium, to Toyotsu Rare Earths India, a subsidiary of Japan’s Toyota Tsusho, under a 2012 bilateral agreement. These materials are processed and shipped to Japan for use in electric vehicle motors and other high-tech applications. 

In 2024, over 1,000 metric tons of rare earths were sent to Japan, about one-third of IREL’s annual output of 2,900 metric tons.

Domestic Shortage and China’s Export Curbs

India has significant reserves of rare earths, about 6.9 million metric tons, the 5th-largest globally, but lacks large-scale processing and magnet manufacturing facilities. In the fiscal year ending March 2025, the country imported 53,748 metric tons of rare earth magnets, mostly from China. 

China, which leads global processing, began restricting rare earth exports in April 2024, affecting global supply chains.

Government Instructions

At a recent meeting with industry representatives, Commerce Minister Piyush Goyal advised IREL to prioritise domestic needs. However, given the bilateral nature of the agreement with Japan, a full suspension may take time. According to the reports, IREL aims to resolve the matter diplomatically.

Read more: India Explores Rare Earth Magnet Production with Public and Private Sectors!

IREL’s Capacity and Plans

IREL operates an extraction plant in Odisha and a refining unit in Kerala. It is currently the only authorised miner of rare earths in India and supplies strategic materials to the Department of Atomic Energy. The company aims to produce 450 metric tons of neodymium in FY26 and is targeting a capacity increase by 2030. It is also looking for a corporate partner to begin domestic magnet production.

Conclusion

India is reviewing its export commitments to secure rare earths for local industries. Any changes to existing trade arrangements will depend on bilateral discussions and future infrastructure development.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.