Govt meets 20 firms on ₹7,280-crore rare earth magnets scheme

New Delhi: Union heavy industries minister H.D. Kumaraswamy on Monday chaired a stakeholder consultation with about 20 companies on the ₹7,280-crore scheme to incentivize manufacturing of sintered rare earth magnets.

The meeting underscores India’s push to build a domestic supply chain for rare-earth magnets, a critical input for electric vehicles (EVs), renewables and defence equipment.

"The consultation witnessed participation from over 20 industry stakeholders, and their concerns and suggestions on the scheme notification were discussed in detail," the minister said on X, formerly Twitter.

The industry's concerns over raw material security were addressed, with the government's assurance that state-run India Rare Earths Ltd (IREL) will provide 500 tonnes of rare earth oxides for a few participants, the heavy industries ministry said in a statement.

"To strengthen raw material security, it was highlighted that IREL will supply 500 MT of NdPr oxide per annum to selected beneficiaries under the scheme. Suppliers from outside India were also present and assured guaranteed supply, reinforcing confidence in the availability of critical inputs," Kumaraswamy said.

NdPr oxide refers to neodymium-praseodymium oxide, a key input for these magnets.

According to the scheme guidelines notified on 15 December, IREL will supply raw material to three of the lowest bidders.

Mint had reported on 2 November that global rare earth oxide suppliers Iluka, Lynas and Rainbow had shown interest.

According to the statement, senior ministry officials told the industry that the request for proposals (RFP) was being finalized.

Incentive scheme

The incentive package for 6,000 tonnes of magnet capacity under the seven-year long scheme got the Union cabinet's assent late November, about six months after China first began restricting export of specific rare earth magnets, rattling manufacturers around the world.

China has about 60% of the world's rare earth mining and 90% of processing capacity.

The government's scheme will provide capital incentives of ₹750 crore for setting up five manufacturing plants, along with sales-linked incentives once these factories are set up. The first two years will be a gestation time for setting up the plants, with sales incentives to be disbursed for five years after that period.

It aims to create a midstream industry that uses refined rare earth oxides to make magnets for sectors such as defence, electronics, renewable energy and EVs, the guidelines said.

The procedure for making these magnets involves upstream mining of rare earth ores to make oxides, the midstream process of turning these oxides into metals and later magnets, followed by the downstream process of fashioning them for various uses.

IREL, India's sole rare earth magnet maker, has the capacity to produce about 400 tonnes of rare earth oxides a year, which can be used to make about 1,200 tonnes of magnets. As per the thumb rule, one unit of rare earth oxides can on an average be used to make three units of rare earth magnets.

The company has a stockpile of about 500 tonnes of rare earth oxides, meaning it can support manufacturing of around 1,500 tonnes of magnets.