Shares of Maruti Suzuki rose over 2 percent to Rs 12,841 in morning trade on June 18, rallying for a fouth session in a row on reports that the Indian government is considering Australia as a potential alternative for sourcing rare-earth magnets, as India looks to diversify its supply chain.
The development holds added significance for Maruti Suzuki, as India’s largest automaker prepares to launch its first electric vehicle, the E-Vitara. Just last week, CNBC-TV18 reported that company sources were considering delaying the launch and trimming production targets due to a shortage of rare-earth magnets.
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Government sources added that the emphasis is on ramping up output under the National Critical Minerals Mission, alongside promoting recycling through a circular economy model. The move follows China’s tightening of exports of rare-earth magnets, which are essential for electric vehicle components.
Maruti wasn't the first OEM to flag concerns regarding rare earth magnets. Two-wheeler majors such as Bajaj Auto and TVS Motor Company have warned that production could come to a grinding halt as early as next month.
Last week, Commerce Minister Piyush Goyal, while speaking in Bern, Switzerland, said that the Indian government is actively exploring alternatives, including diplomatic efforts and the development of new supply chains. According to Goyal, the Indian embassy is already in discussions with Chinese authorities on the matter, and the commerce ministry is engaged as well.
While sourcing from Australia offers some relief, analysts note that rare-earth magnets from the country are likely to be more expensive due to lower production volumes. In contrast, China accounts for nearly 90 percent of global magnet output, giving it a significant cost advantage.
At about 10 am, shares of the company were trading at Rs 12,839, higher by 1.7 percent from the last close on the NSE. Maruti Suzuki shares have risen nearly 19 percent since the beginning of the year.
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