Why Rare Earth Element is so important in international politics?
- China presently controls almost 97 per cent of the world’s REE market and has developed a monopolistic hold on it.
- Japan is the world’s largest importer of REE, mainly because of its major industrial base in electronics and the consequent demand for a significant amount of REE.
- REEs are required for computers, laptops and televisions. They also have significant usage in mobile telephony and Magnetic Resonance Imaging (MRI) equipment.
- Countries are overprotective about imports and exports of REEs because of their utility in strategic sectors such as missiles.
- For sometime now China has been found linking exports of REEs to Japan with territorial disputes.
- Naturally, Japan has been on the lookout for alternate supply chains. Sensing this opportunity India is trying to fill the void, at least partially.
Rare Earth Elements as far as China is concerned ?
- REEs include elements like Lanthanum, Cerium, Praseodymium, Erbium, Gadolinium, etc.
- China has been effectively controlling the global REE market for many years.
- In 2012, it published the first ever White Paper on REE tilted "Situations and Policies of China's Rare Earth Industry", which highlighted the need for the ‘sustainable and healthy development of this industry’.
- But in reality China has not followed the ‘healthy’ trend and has begun to use REE exports to Japan as a diplomatic lever especially over their maritime territorial dispute.
How does India come into picture between China and Japan ?
- India is known to be the second largest producer of REEs.
- According to one estimate made in 2010, China produced 1.3 lakh tonnes of REEs while India’s output was 2,700 tonnes.
- India, in spite of being a small player in comparison with China, has been in the business of REE since the 1950s when Indian Rare Earths Ltd. was established.
- The recent agreement between Japan and India on REE could also be viewed as a continuation of their existing relationship in the field of REEs.
- Japan has already made investments in this regard in India. A subsidiary of Toyota Tsusho called Toyotsu Rare Earths India Pvt. Ltd. is based at Vishakapatnam, Andhra Pradesh, and is involved in the production of some rare earth elements.
- The company operates a monazite sand rare earth production base and is involved in the making of rare earths such as neodymium, lanthanum and cerium. It receives the supply of monazite sand from Indian Rare Earths Ltd.
How is India and Japan moving forward on this aspect and involving the third world in this aspect?
- The most interesting aspect of India and Japan coming together is that they are also proposing to engage with other states where REEs are available for excavation.
- India and Japan want to develop a joint venture (JV) in third countries, particularly in under-developed states.
- They are proposing to engage states such as Afghanistan and Kazakhstan basically to secure their supply sources.
- The rare-earth resources in Afghanistan (Helmand province) are estimated to be one million tonnes; and, particularly for India, engagement in Afghanistan has considerable strategic significance too.
- With regard to Kazakhstan too, India and Japan aim to undertake joint development of rare-earth assets. All these efforts could assist India and Japan to develop a global market for REEs.
Rare Earth Elements as far as India is concerned ?
- Japan is aware of India’s huge reserves of REEs in Odisha.
- Recently, Indian Rare Earths Ltd., which comes under the Department of Atomic Energy, has sought clearance for rare earths mining from sand in the coastal stretch of around 2,500 hectares at Bramhagiri (Puri district).
- Japan has earmarked a $1.5-billion corpus for developing alternative sources of rare earths and India needs to attract Japanese investment.
Both India and Japan understand that the REE sector offers commercial, strategic and diplomatic advantages. At the same time, ensuring the regular supply of REEs is going to be a time consuming process. If they invest today in various projects then it could take approximately five years to double or triple output. Over the years many countries in the world had stopped making investments in the mining of REEs because financially it was more viable to import from China. However, this had led to China developing a monopoly in this sector.
Strategic,Economic importance of REEs
for India ?
- For countries like India there is much to learn from the REE experience.
- It is important to appreciate that with regard to critical materials and major minerals it is essential to plan thoughtfully.
- There should be minimal dependence on other countries with regard to the strategic materials required in the energy, aerospace, nuclear and defence sectors.
- Also, there is a need to constantly monitor the ongoing trends in areas like semiconductors, silicon technology, chips manufacture, thin films, nanotechnologies, etc.
- This could assist in undertaking mid-course corrections in policies with respect to strategic materials, if necessary.
- The presence or absences of strategic materials do have both short-term and long-term impacts on the country’s economy as well as on military readiness.