Shares of PSU mining major Gujarat Mineral Development Corporation (GMDC) were sharply higher by 13 percent on July 18, after reports emerged that PMO is likely to hold a key stakeholder meeting on the rare-earth magnet crisis. Tracking the news, shares of Orissa Minerals Development Company (OMDC) too ended higher by over 8 percent.
GMDC has stated intentions of entering the critical mineral space, including rare earth, and the company has been working towards this, through it has not officially disclosed details of its plans yet. The management consider rare earths as a 'value driver', as the material goes into the making permanent magnets, used in the electric vehicle supply chain. The company said in May that it has allocated approximately Rs 3,000-4,000 crore for critical mineral projects, without elaborating on further details.
The electronics industry has written to the government, flagging off ‘informal sanctions’ by China on rare earth supplies and equipment, which the players believe could put the export-linked smartphone manufacturing under ‘serious risk’, CNBC-TV18 reported separately.
During May and June, few automakers had flagged off risks of production, if the restricted supplies of rare earth magnet from China were not quickly restored. Magnets formed out of rare earth elements (REEs) are crucial for the automotive sector, especially electric vehicles (EVs), as well as for in the renewable energy space. To address automakers' concerns, the Centre is considering a possible relaxation of localisation norms, allowing the import of fully-built motors, newspaper Mint reported on July 18.
Acknowledging this, Heavy Industries Minister HD Kumaraswamy had recently said that the Centre is working on addressing the rare earth supply issue. "We are working on it," the minister had said last month. An incentive scheme for rare earth magnets too is likely being considered, in order to subsidise the domestic processing of the minerals, news reports said, quoting government officials.
"A scheme has been circulated for Rs 1,345 crore subsidy for manufacturers of rare earth magnets. It is currently under inter-ministerial consultation. It is proposed that there will be two manufacturers as of now, however this could change by the time the scheme is ready," Kumaraswamy had said.
In June, NSA Ajit Doval and Chinese Foreign Minister Wang Yi met in Beijing on the sideline of a SCO meeting, and reviewed bilateral relations, underscoring the need to promote an overall development. Commerce Secretary Sunil Barthwal confirmed that India is engaged with China on the issue of rare earth minerals supply, ensuring all efforts to seek uninterrupted imports.
In light of China's restricted exports of rare earth elements, GMDC may emerge as a key alternative supplier. Aside of GMDC, among listed players, NMDC, Coal India, Hindustan Zinc, Vedanta, and MOIL are potential leaders in India’s rare earth ambition, and the Centre has auctioned four blocks of strategic minerals this year, though only one is focused entirely on rare earths.
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