India returns to rare earths production.
After a 7-year hiatus, India has decided to expand its output of rare earth minerals by stepping up indigenous production of the cticial metals.
India, which has already allotted over $32m to set up a 5,000 metric tonne capacity plant in Orissa, is planning to step up indigenous production of rare earth minerals even further.
Given the concerns over China's flexing of its muscle on the international stage by restricting rare earth exports, Indian mine ministry officials told a newswire agency that a strategy paper was in the works by a government panel to give impetus to exploration and discovery of rare earth elements.
Earlier, R Patra, chairman of the state run Indian Rare Earths Limited said his firm had received environmental clearance to produce the hi-tech minerals at a plant in eastern state of Orissa.
Lack of competition in the market has ensured that India stopped producing rare earths in 2004. The chairman noted that with improved in-house technology which would make the firm more competitive, there would be enough for exports after taking into account the domestic demand for the various minerals.
The committee to be set up in India is to look into the current availability of rare earths and decide on a new strategy for production, in a bid to ensure long term availability of the raw material.
The world's largest rare earth producer and exporter, China, accounts for more than 90% of global production and is home to one third of the world's total reserves.
India imports all its current requirements from China and uses the precious metals in consumer goods industries, petroleum refineries and the automobile sector.
In a bid to counter the fall in exports from China, several companies have got into rare earth production in India. Toyota Tsusho, a part of Toyoto Motors, is setting up a rare earth processing plant in Vishakapatnam, reportedly with a partial supply of mixed rare earth chloride from Indian Rare Earths.
German chemical giant BASF and Indian Oil Corporation are also said to have plans to produce rare earth minerals from catalysts used in the petroleum refinery sector.
China, in recent years, has become a major consumer of metals owing to the robust growth in its economy. According to a World Bank report, between 2002 and 2008, Chinese consumption of key metals grew at an average 16.1% per annum as compared with less than 1% demand outside China.
In China, rare earths production as a percentage of the global total has been decreasing. Wang Caifeng, formerly with the Ministry of Industry and Information Technology, told a Chinese newspaper that the ratio of output from China as compared to that of the rest of the world would fall sharply from the current 90% to 60% within two years, with several foreign players resuming mining of the precious minerals.
China, which sits on just 30% of global reserves, has seen reserves depleted and has suffered environmental damage due to rampant mining. However, it is not just China that has been reducing production.
The United States and Australia, which also have sizeable reserves, slashed production because of lower prices as a result of what they termed overproduction in China. As China brought down its exports, prices on the international market have surged.
The decision in June by Japanese chemical giant Shin-Etsu Chemical Company to raise the price of its rare earth magnets prompted other enterprises to follow suit. Shin-Etsu Chemical said it would increase by over 40% the price of rare earth magnets, one of its main products, in Japan and the overseas market effective July 1.
The company said it was raising prices because the prices of neodymium and dysprosium, the key raw materials for rare earth magnets, continue to rise steeply due to mining restrictions and the cutting of export quotas for rare earth minerals by China.
"Demand for rare earths is mostly in developed countries such as the United States, Japan, Europe and Canada. There is great demand in Canada too,'' the Indian official said.
According to the chairman, Indian domestic demand in 2004 was about 200 metric tonnes and, while it is likely this number would have increased substantially since then, the country would have a lot to export very soon.