Last July, the Indian automotive industry slowed down production and even faced the threat of halting due to China’s rare earth export controls. The incident and the previous COVID lockdown underlined how rare earths are ubiquitous in the modern economy even if the final product contains trace elements.Rare earth elements are a group of critical minerals used in everything from EV motors and smartphone vibration actuators to rocket nosecones and fighter jets. Despite their name, most are relatively abundant, but China dominates their processing. Its tightening of rare earth exports last year exposed the vulnerability of global supply chains, prompting countries and companies to diversify sources. The International Energy Agency estimates that global mining and refining will require $915 billion in fresh investment between 2026 and 2035.
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Rare Earth corridorThe Indian govt has launched the Rs 34,300-crore National Critical Mineral Mission (NCMM) and a Rs 7,280-crore rare earth magnet programme (REPM) to build domestic capabilities. Coupled with global efforts to diversify supply chains, these initiatives present Tamil Nadu with a significant opportunity to emerge as a critical minerals hub, backed by its mineral reserves, advanced manufacturing base and strong automotive, electronics, aerospace and defence industries.Tamil Nadu holds significant reserves of monazite out of India’s estimated 13.15 million tonnes of monazite, spread across Odisha, Kerala, and Andhra Pradesh. The Union govt has announced a dedicated rare earth programme in these mineral-rich states to complement the REMP program. Monazite contains rare-earth oxides (REO), crucial for neodymium-praseodymium (NdPr) permanent magnets (current state of the art) used in EVs and various other crucial applications. The opportunity goes well beyond mining into midstream processing, recycling and supplying magnets to original equipment manufacturers (OEMs).Beach sand miningTamil Nadu Mineral Ltd (TAMIN) formed a joint venture with IREL, a central PSU, to set up integrated mining and mineral processing facilities for mineral sands deposits at Sattankulam (1,920 hectare) and the Kudhiraimozhi deposit (6,000 hectares). S B Mohanty, CMD of IREL (India), said the project is awaiting final statutory clearances. “The initial phase of the primary processing plant requires an investment of Rs 3,500 to Rs 4,000 crore. Numerous private players are showing interest in setting up operations across the value chain,” he said.“Tamil Nadu can attract both the rare earth oxide-to-magnet value chain for various applications and the titanium value chain from oxides to slag and sponges for paint, plastics and other industries. The project will create a massive clustering effect as the primary processing plant provides a feedstock for midstream and downstream industries. The state has 54 different deposits of about 300 million tonnes of beach sand minerals,” he added.Shobhankita Reddy, researcher of technology geopolitics at Takshashila Institution, said Tamil Nadu can leverage its existing industrial base to target capital-intensive midstream processing, such as refining and metallization and explore global partnerships, which would guarantee technology transfer and offtakes.“Tamil Nadu is among the few states well placed to capture value from the programmes. The demand for high-volume base metals such as Titanium, Zirconium Lithium, Molybdenum, are expected to increase, and concentration of their processing is becoming a cause of concern. India needs to explore international partnerships for processing and recycling technologies from countries like Japan, Australia and with the EU for the magnet scheme as countries like Germany are among the world’s largest importers.”Liberalisation of beach sand mineral mining to allow private participation with strict enforcement and environmental protection is crucial to attract capital and the massive capacity expansion required to unlock these reserves, she added.Balakrishnan Iyer, founder and chief executive of US-based Bridge Green Upcycle, said Tamil Nadu’s strong industrial base and large consumption of electronics, EVs and renewable energy equipment make it a vast “urban mine”, capable of recovering valuable materials instead of relying solely on primary sources.“The green transition, AI and geopolitical shifts present a once-in-a-generation opportunity, potentially bigger than the IT or semiconductor booms, because critical minerals underpin future industries such as data centres, AI and electric vehicles. The growing wave of end-of-life batteries and e-waste also offers a major recycling opportunity that benefits both the economy and the environment,” he said.US-based Bridge Green Upcycle has opened a critical mineral recovery plant at Gummidipoondi, recovering lithium, cobalt, nickel, manganese, copper and graphite etc from end-of-life batteries; it has been selected for the union govt’s critical mineral recycling incentive scheme. Iyer explains that having critical mineral processing located close to downstream manufacturers within 100km is an incredible advantage for the state’s existing industries, as the pandemic has shown, and India should strengthen the collection network for recycling and allow some necessary e-waste imports in the interim.States such as Andhra Pradesh, Odisha and Kerala have moved quickly, unveiling state-specific incentives, developing processing parks and attracting investments from foreign companies. Tamil Nadu, however, is yet to spell out its roadmap for the sector. While the state had announced a joint venture with IREL and held sub-committee discussions on the proposed rare earth corridor, progress has so far been limited, according to people familiar with the matter.However, a senior industries department official, on condition of anonymity said the govt is in discussions with leading domestic and global companies, including firms applying under the REPM scheme. “We are exploring opportunities across advanced materials, permanent magnets and recycling in partnership with OEMs and technology providers. The focus is on building a high-value critical minerals ecosystem that attracts investment and creates quality employment. The State is also actively suggesting companies to co-locate their manufacturing with their R&D and GCC facilities in the sector,” the official said.
