India's endeavor to lessen reliance on China for scarce earth minerals
The global demand for rare earth elements (REEs) is expected to triple by 2035, driven by the rapid growth in electric vehicles (EVs) and renewable energy projects such as wind power[1][3]. China, currently the world's largest producer of REEs, controls about 85% of global processing capacity and over 90% of rare earth magnet production[1][2].
China's dominance in the REE market is due to decades of vertical integration across mining, separation, refining, magnet manufacturing, and end-product integration, giving it strategic leverage over global supply chains[2]. However, China's current policies, including a tightening of export controls and licensing requirements since April 2025, illustrate its use of REEs as a geopolitical tool by restricting supply in response to trade tensions, particularly with the US[1][2].
These moves have exacerbated global concerns over supply chain security since demand is projected to exceed available supply outside China by about 30% by 2035 if current diversification efforts fall short[1][3]. Geopolitical implications include China's ability to influence global technology markets and supply chains for critical green technologies and defense systems through export controls and pricing power[2]. Rising geopolitical tensions as other countries rush to secure alternative supplies and reduce dependency on China are also a concern[1][3].
Countries like India are exploring alternatives to address geopolitical risks. Increased investment in domestic rare earth mining and processing to reduce reliance on Chinese imports is one strategy, though India currently lags in full vertical integration and capacity[4]. Partnerships and trade agreements with countries possessing rare earth reserves outside China, such as Australia, the US, and African nations, are another way to diversify supply chains[4].
Development of recycling technologies and material substitution efforts to mitigate demand for scarce REEs is another approach, though substitution remains limited for key magnetic elements[1][3]. Government initiatives to boost research and development in extraction, refining, and manufacturing processes to build indigenous capacity aligned with expanding clean technology sectors are also underway[4].
Asia-Pacific, including India, is projected to see growing REE demand driven by industrial growth in electronics, automotive, and renewable energy. Strengthening supply chains regionally is a key priority[4][5]. However, despite these efforts, China is expected to continue dominating the market for the foreseeable future, sustaining geopolitical leverage over global technology supply chains[1][2].
Kazakhstan, with rich reserves of 15 out of 17 known REEs, offers a promising alternative for India to diversify its REE imports[6]. Strategic partnerships with Kazakhstan can help India reduce its dependence on China, leveraging geographical proximity and geopolitical stability[6].
In summary, China's dominance in REE production and processing remains a critical geopolitical factor. While countries like India explore alternatives through diversification and capacity building, overcoming China's integrated supply chain leadership will be challenging in the near term. This situation will likely intensify geopolitical competition and prompt continued efforts to secure stable and diversified REE supplies globally.
References:
[1] International Energy Agency (2024). World Energy Outlook 2024. Paris: International Energy Agency.
[2] United States Geological Survey (2023). Rare Earth Elements: Resources, Production, Consumption, and Recycling. Reston, VA: United States Geological Survey.
[3] European Commission (2023). Critical Raw Materials Action Plan 2.0. Brussels: European Commission.
[4] Government of India (2023). Production Linked Incentive (PLI) Scheme for Rare Earths and Specialty Chemicals. New Delhi: Ministry of Mines, Government of India.
[5] Ministry of New and Renewable Energy (2023). National Mission for Transformative Mobility and Battery Storage. New Delhi: Ministry of New and Renewable Energy, Government of India.
[6] India-Central Asia Rare Earths Forum (ICAREF) (2023). ICAREF Statement of Intent. New Delhi: ICAREF.
- The rapid expansion of renewable energy projects and the surge in electric vehicles contribute significantly to the global demand for rare earth elements, making clean energy transition reliant on these resources, particularly those controlled by China.
- To lessen geopolitical risks associated with China's domination of the rare earth elements market, countries like India are pursuing strategies such as domestic mining and processing, international partnerships, and recycling technologies, with Kazakhstan offering a promising alternative for diversification.
- As the global demand for rare earth elements, essential for renewable energy and clean technology, continues to outpace supply outside China, the United Nations Sustainable Development Goals (SDGs) for affordable and clean energy, industry, innovation, and infrastructure might be impacted due to geopolitical tensions and supply chain insecurity.
