Making rare earths more common

India is a rank outsider when it comes to owning and producing strategic mineral and metal resources. In fact, it has not even made an honest start. Lack of access to best-technology practices due to restrictive regimes, coupled with the larger problem of a protectionist environment that did not incentivise innovation, meant that critical strategic industries nuclear, space, defence and communications depended on high-technology imports which got progressively more difficult for largely non-economic reasons. Meanwhile, over the years, diverse applications of these minerals, metals and compounds have turned them into imperatives for cutting-edge industry innovation, besides their indispensable utility to strategic sectors.

This explains China's relentless quest to dominate the world of mining, and its insatiable hunger to secure more reserves by owning mines well beyond its borders. And, specifically, the unsettling fact for other powers is the almost complete control Beijing has achieved over the supply of strategic minerals, metals and rare earth compounds. For instance, it caters to 60 per cent of world's demand for rare earths and controls 90 per cent of the supply. It's among the top three producers of 10 out of the 12 strategic minerals and metals Indian planners have put in this category. And over the past few years, it has outpriced well-established players from the business Molycorp in the US stopped mining rare earths for this reason, and is now being revived with US government support.

It is in this context and backdrop that India is making its first foray. Bunching strategic minerals, metals and rare earths into a single basket, the mining working group for the Twelfth Plan (2012-17) has for the first time suggested setting up a national body in two years' time with a corpus of Rs 500 crore to source strategic minerals, metals and rare earths, possibly on the lines of the Japan Oil, Gas and Metals National Corporation. It also calls for an inter-ministerial group along with industry stakeholders to identify countries with which bilateral agreements can be signed urgently to "for securing the supply of strategic minerals."

For what is clearly the first Indian attempt at spelling out a strategy for this sector, several measures have been suggested:

* To build a national stockpile for "strategically critical input metals" tin, cobalt, lithium, germanium, gallium, indium, niobium, beryllium, tantalum, tungsten, bismuth, selenium and rare earth metals at an estimated cost of Rs 1,000 crore. The Non-Ferrous Materials Technology Development Centre, Hyderabad, has been identified as the nodal coordinating agency for this.

* Focus and invest on research and development by adopting a "technology mission approach specific to strategic minerals." For this purpose, the document calls for reorienting the focus of mineral research and development centres besides coordinating "pre-competitive research" on energy critical and rare earth metals with CSIR, DRDO and institutions under the mines ministry.

* Encourage domestic producers by incentivising by-product recovery. This is important because most of these metals are by-products of base metal mining. Cobalt, for instance, is a by-product of copper and nickel mining used in the defence industry. Gallium is a by-product of the alumina making process while germanium, which is used for making solar cells and is major input metal to the defence industry, is a by-product of the sphalerite, zinc and copper smelting process.

* Establishment of an Indian competence network for strategic minerals and metals with all stakeholders, after a proper study in the first two years of India's market potential, exploration levels and other factors.

* The department of atomic energy is to take "substantive steps" to refashion its exploration strategy, using the latest technology, to maximise the potential of beach sand mineral reserves. This is important because monazite, a beach sand mineral resource, is an abundantly available source for rare earths, but is under DAE control for its thorium content.

* Simplify land acquisition and grant concessions to exploit beach-sand minerals. State governments need to prioritise mining of these minerals in their land-use policy so that these metals are not lost to another activity.

* The Geological Survey of India should carry out a detailed study of all available data from the national geochemical mapping exercise for the specific purpose of locating possible sources for rare earth minerals and metals.

This is clearly not an ambitious plan, but surely the first definitive steps towards a foundation.

There are several challenges that will continue to inhibit progress on this front despite concrete measures. Take for instance the case of extracting rare earths from monazite. It proves to be far more expensive than what China brings to the market, with heavy rare earths there being extracted from ion exchange clay. and light rare earths from bastanaesite. China has ample reserves of both these sources. So much so that Indian Rare Earths Ltd was forced to suspend operations in 2004 at its monazite processing plant due to cheap Chinese imports.

But there is a need to re-energise efforts here, because global demand is only on the rise and there is a desperate search for alternate suppliers. While the global demand for rare earths fell marginally to about 96,500 tonnes in 2009 due to the economic crisis, the increased emphasis on clean technology across all industries, driven by the climate change debate, has shot up demand estimates to 1,97,000 tonnes in 2015, which could outstrip supply levels.

Now, India holds 16 per cent of the world's beach-sand mineral reserves but its production is only 6-7 per cent of the global production. For this reason, the working group has suggested setting up joint ventures with state governments of Orissa, Andhra Pradesh, Tamil Nadu and Kerala as a first step to improve exploitation of resources like monazite.

On a broader plane, it's important to realise that India is starting out rather late but on the plus side, the international political environment is conducive to supporting India with technological assistance and even market access. To jumpstart various levels, the government will have to frame a comprehensive policy as a matter of national strategic priority. This is vital because in many ways, this will revive the core of an almost non-existent security-industry complex.

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