India's Rare Earths Industry

COMMENTARY systems. Rare earth permanent magnets India’s Rare Earths Industry are needed in several defence and space devices. Neodymium-doped Yttrium Alu- A Case of Missed Opportunities minium Garnet (Nd YAG) lasers are used in range fi nding applications that are part and parcel of any advanced weapon S Chandrashekar, Lalitha Sundaresan system. Yttrium Iron Garnets as well as Yttrium Gadolinium Garnets are needed The creation of knowledge in lobal and Indian interest in the for building microwave components that the rare earths domain in role of hi-tech materials such as go into advanced communications and India is confi ned to a few Grare earths for crafting strategies radar facilities. Terfenol D, an alloy of that further a country’s development terbium, iron and dysprosium, has unique government-run complexes with and geopolitical interests has been on properties that is used in sonar and other no major links to commercial the increase lately. This renewed interest acoustic applications. industry. With interaction has come about due to various actions Historically, India was one of the early between the research community taken by China to establish a dominant countries to recognise the importance of position in the global rare earths industry rare earths. Specifi c organisational and and industry non-existent, India’s and to leverage this position to further its institutional arrangements were set up position as a player in the global global interests (Mancheri et al 2013). to regulate, manage and develop rare rare earths ecosystem is bound to Because of their unique position in the earth resources in the country. Over a be weak. Further, in the absence periodic table, rare earth elements have period of time, global developments in many desirable properties that fi nd use in rare earths coupled with Indian inertia of a cohesive national strategy a variety of high technology applications. may have signifi cantly eroded India’s for moving the country up the Apart from their use in a number of competitive position vis-à-vis other coun- value chain in rare earths into the well-established industries, rare earths tries in the management of a valuable intermediate and fi nal product are particularly important for the manu- national resource. facture of key intermediates that go into Given Chinese actions and renewed space, India continues to be a a number of green energy products such global interest in rare earths, it may be low-cost raw material supplier to as hybrid cars, energy effi cient lighting, necessary for Indian decision-makers to the global rare earths industry. windmills and fuel cells. These new high take stock of where India is today with growth industries are likely to fuel an respect to the global rare earths industry increase in global demand for rare earth and decide on an appropriate plan of materials and products. action. This requires a deeper under- The value chains of the various rare standing of the various value chains in earth elements and their connections with the global rare earths ecosystem and various intermediate and end use indus- India’s position in these knowledge- tries for an advanced economy such as based value chains. Hopefully, such an the United States (US) or Japan have analysis will also shed some light on the been well studied and mapped. Some of components of a national strategy for the major intermediate industries that are the management of this resource. These signifi cant users of rare earths are the issues will be addressed in this article. glass industry, permanent magnet industry, phosphors used in lighting and dis- India and Global Industry play devices, catalysts for the oil refi ning Rare earth resources are predominantly industry as well as oxygen sensors, bat- found in China, US, Australia and India. teries and catalytic converters for use in India occupies fourth position, with 1.3 automobiles. Major sectors linked to million tonnes of rare earth oxide (REO) these intermediates include consumer content. The Department of Atomic S Chandrashekar (chandrashekar.schandra@ electronics, petrochemicals, transporta- E nergy (DAE), however, estimates the gmail.com) is a former ISRO scientist and tion and green energy that include the t otal rare earth reserves in India at 10.21 faculty at the Indian Institute of Management new emerging industries of effi cient CFL million tonnes. This would put India in Bangalore. He is currently a visiting faculty LED at the National Institute of Advanced Studies, (compact fl uorescent lamp) and the third position above Australia (Min- Bengaluru. Lalitha Sundaresan (sundaresan. (light-emitting diode) lighting (Chan- istry of Mines 2012). India has also been [email protected]) is a former ISRO scientist drashekar 2013). engaged in mining and extraction activ- and a visiting faculty at the National Institute Rare earths are also key materials for ities for more than fi ve decades. This of Advanced Studies. use in a number of military and strategic makes it possible for India to become an Economic & Political Weekly EPW JANUARY 16, 2016 vol lI no 3 27 COMMENTARY important player in the global rare Figure 1: Rare Earth Industry Life Cycle earths industry. The RE product/industry life cycle In India, monazite is the principal Incubation source of rare earths. It occurs in associ- 1880–1950 Maturity 1990 ation with other heavy minerals such as Decline ? Substitutes– ilmenite, rutile, zircon, etc, in the beach New Drivers–Green sands and inland placer deposits (Minis- Growth Technologies China-Led 1970–90 try of Mines 2012). Monazite also con- E tains thorium and uranium. Because of the presence of these radioactive elements, mining of monazite sands is Technology cycles linked to c arried out only by a government body, D product cycles 1990 onwards the DAE. slowdown in US IREL Indian Rare Earths Limited ( ), an Diversity autonomous body under the DAE, is the units) of Industry (number size 1950–70 Gas lighting–flint–glass–optical glass polishing– sole producer of rare earth compounds C metallurgy–phosphors–catalysts–magnets– in India. IREL has been in existence since garnets–catalytic converters–fibre optics–ceramics 1949 in its current form and has also been exporting rare earth compounds B for several decades. Even though IREL’s A name suggests that it is largely focused TimeTime on the development and use of rare earths, most of its income is derived Source: Generated by the authors. from the production and marketing of there is a reference to the availability of China’s export of rare earth materials the other minerals that are contained in monazite and rare earths in Southern also came down signifi cantly in the fol- the beach sands such as ilmenite, rutile, India in a book published in 1915 lowing years. These export curbs were sillimanite and zircon. (Johnston 1915). For a long time, India meant to move production of high value More recently, even the limited produc- and Brazil were the only suppliers of addition rare earth products from around tion of rare earths has been decreasing. rare earths; though at that time, many the world into China. This was the fi rst In 2013–14, India produced less than a of the applications of rare earths were instance where the world saw the impact tonne of rare earth materials and sold still to be discovered. China started of the dominant position occupied by about 4.2 tonnes mainly from its inventory. mining rare earths in 1959. While China China in the global rare earths industry. The absence of a domestic market and went ahead in building a strong domestic These Chinese actions have evoked con- the fall in exports because of low-cost rare earths ecosystem, India has been cerns across the developed world about Chinese production have been the causes primarily a supplier of rare earth raw how to safeguard the supply of rare of this decline. materials and some basic rare earth earth materials that play such a critical Most of the products using rare earth compounds. role in the continued development of materials are currently imported into The story of how China has established their economies. India in fi nished form. In spite of the fact a near global monopoly over rare earth These Chinese moves and counter- that India was an early entrant into the raw materials and almost all intermediate moves by the more advanced economies mining and processing of rare earths, rare earth products has been recounted of the world provide a new set of potential there has been no major effort within in detail elsewhere (Mancheri et al 2013). opportunities to kick-start the moribund the country to go up the rare earths Chinese behaviour in using their mono- rare earths industry in India. In order to value chain (Parliament Question 2015). poly position in the rare earths eco- frame a suitable strategy for India, we Currently there is no manufacturing system as a component of its geo- must fi rst look at the relative competitive facility in India for any of the intermedi- political strategy is also becoming positions occupied by the major players ate rare earth products. In addition, sep- increasingly self-evident. in the global rare earths ecosystem. arating out the various rare earth frac- In 2010, China had cut off supplies tions into their individual elements and of rare earths to Japan over a confl ict Current Competitive Positions then converting them into the metal between China and Japan in the East The use of evolutionary approaches exem- form for use in the making of products, China Sea. Although there are different plifi ed by the use of ‘S’ curves has been increases the value addition to the raw views (King and Armstrong 2013) as to well-studied in the business world.

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