Private Investment in Rare Earth Minerals: Key Policy Changes and India's Strategy for UPSC Examination
India's mining policy has undergone a historic transformation. The recently passed Mines and Minerals Amendment Bill 2024 by both houses of Parliament has opened the door for the private sector to exploit rare earth minerals like lithium, cobalt, and nickel. This change is not only significant for India's economic strategy but also a central topic for UPSC candidates linked to GS-3 questions on mining, environment, and economic development.
Rare Earth Elements: Scientific Perspective and Global Importance
Rare Earth Elements (REE) comprise a group of 17 metals including scandium, yttrium, and 15 lanthanides. These elements are indispensable in modern technology due to their unique magnetic, phosphorescent, and electrochemical properties.
Key Applications:
Defense Equipment: Missile guidance systems, Akash and Astra missiles
Electronics: Smartphones, computer monitors, LED displays
Green Energy: Wind turbines, solar panels
Electric Vehicles: EV motors and batteries
Medical: MRI scanners
China's Dominance and Impact on India
China has a monopoly in the rare earth market - it produces 60-67% of global production and controls 90% of processing. In 2024, China imposed export restrictions on rare earth in response to US tariffs, severely impacting India's automotive and EV industry.
Impact on India:
India is 90% dependent on China for rare earth imports
In 2024-25, India imported 53,748 metric tons of rare earth magnets
Over 35 Indian importers did not receive shipments from China
Forced to invoke Force Majeure clauses
India's Rare Earth Resources and Current Status
India possesses the world's third-largest rare earth reserves - approximately 6.9 million tons, which is 6-8% of global reserves. The main reserves are in monazite sand found in coastal states.
State-wise Distribution (in million tons):
| State | Monazite Reserves |
|---|---|
| Andhra Pradesh | 3.72 |
| Odisha | 2.41 |
| Tamil Nadu | 2.46 |
| Kerala | 1.90 |
| West Bengal | 1.22 |
| Jharkhand | 0.22 |
IREL Capacities:
Current Production: 4,000 metric tons per year
Installed Capacity: 1 million tons mineral processing
Rare Earth Extraction Plant: 11,200 TPA capacity
Refining Capacity: 5,000 TPA TREO
Mines and Minerals Amendment Bill 2024: Key Provisions
Incentives for Private Sector:
Exploitation of critical minerals without additional royalty
Removal of 50% sale cap from captive mines
Establishment of Mineral Exchange
Extension of lease area for deep-seated minerals
National Mineral Exploration and Development Trust:
Contribution Rate: Increased from 2% to 3% of royalty
Permission for offshore exploration
Support for international exploration
National Critical Mineral Mission: Comprehensive Strategy
The NCMM launched in January 2025 includes an investment of ₹34,300 crores:
Key Components of Mission:
Government Expenditure: ₹16,300 crores
PSU Investment: ₹18,000 crores
Duration: 7 years (2024-31)
Exploration Projects: 1,200
Fast-Track Approval:
New provision for Exploration License
₹500 crores for Processing Parks
₹1,500 crores for Recycling
Important Aspects for UPSC Examination
Related Topics in GS-3:
Mining Policy and Regulation
Environmental Challenges and CRZ rules
Economic Development and Atmanirbhar Bharat
Technological Progress and EV policy
Geopolitical Dependency and supply chain
Important Facts for Examination:
List of 17 Rare Earth Elements
Presence of thorium in monazite
China's 90% processing capacity
India's third-largest reserve position
Previous Years' Questions:
UPSC Prelims 2025: Phosphorescent properties of rare earth elements
UPSC Prelims 2012: China's export restrictions and use in electronic items
Challenges and Way Forward
Technical Challenges:
Complex extraction process from monazite
Presence of radioactive thorium
Scarcity of heavy REE in India
Absence of value chain for magnet and alloy production
Policy Solutions:
PLI Scheme for domestic processing
International Partnerships with Australia, USA
Cooperation in QUAD Initiative
Development of recycling technology
Environmental and Economic Impact
Positive Effects:
Reduction in import dependency
Job creation in mining sector
Development of technological self-reliance
Increase in export capacity
Challenges:
Environmental impact in coastal areas
Compliance with CRZ regulations
Displacement of local communities
Potential for corruption
Key Requirements and Suggestions
Immediate Needs:
Active participation of private sector
R&D investment in processing technology
Infrastructure development in coastal areas
Skill development of expert workforce
Long-term Strategy:
Vertical integration from mining to magnet
International collaboration for technology
Adoption of sustainable mining practices
Establishment of innovation hubs
The Mines and Minerals Amendment Bill 2024 marks a significant turning point in India's mining policy that encourages private investment in the rare earth sector. For UPSC candidates, this topic is important under GS-3 in the context of mining, environment, and economic development.
India's National Critical Mineral Mission and new mining policy are part of a comprehensive strategy to break free from China's dependency. Candidates should pay special attention to the technical characteristics, geopolitical importance, and economic implications of rare earth elements.
This policy change is not only a step towards Atmanirbhar Bharat but also an attempt to strengthen India's position in the 21st-century technological race. From a UPSC perspective, this topic is important for current affairs, Economic Survey, and statistical data as well as maps and charts.
