India reportedly halts rare earth exports to Japan, aiming to expand domestic processing

According to a report from Reuters, sources say India has directed state-run miner IREL to suspend a 13-year-old rare earth export agreement with Japan in order to prioritize domestic supply. The report adds that India’s Commerce Minister Piyush Goyal instructed IREL to halt exports of rare earths—primarily neodymium, a critical material used in magnets for electric vehicle motors.

However, India may not be able to halt supplies to Japan immediately, as they are governed by a bilateral agreement between the two governments, Reuters reports, citing sources.

As noted by Reuters, sources indicate that under a 2012 government agreement, IREL supplies rare earth materials to Toyotsu Rare Earths India—a subsidiary of Japanese trading firm Toyota Tsusho—which processes them for export to Japan, where they manufacture magnets.

In 2024, Toyotsu reportedly shipped over 1,000 metric tons of rare earths to Japan, representing about one-third of the 2,900 tons mined by IREL. Nonetheless, Japan still relies primarily on China for its rare earth supply, according to Reuters.

India aiming to boost domestic rare earth capacity
Reuters notes that IREL is also aiming to build up India’s rare earth processing capabilities, a sector currently dominated by China. According to the report, IREL has historically exported rare earth materials due to limited domestic processing capacity.

However, in light of recent disruptions, the company now seeks to retain more of its output for domestic use and expand both mining and processing within India. Reuters, citing sources, adds that IREL is currently awaiting statutory clearances for four mining projects.

India holds the world’s fifth-largest rare earth reserves, totaling 6.9 million metric tons, but lacks domestic magnet manufacturing. As Reuters highlights, the country depends on imported magnets, primarily from China.

China’s rare earth export curbs hit India’s auto industry
Meanwhile, according to a Nikkei report from early June, Indian automakers are increasingly feeling the impact of Beijing’s restrictions on rare earth mineral and magnet exports, with production stoppages expected “very soon” if shortages continue.

For India, rare earth exports from China have remained frozen, industry sources told Nikkei. Sources note that more than 20 such applications are currently pending with Beijing, but none have been approved so far, according to Nikkei.

Source: TrendForce, Taiwan.