India to suspend rare earth exports to Japan, aims to cut China dependence: Report

The move highlights India’s efforts to secure rare earths domestically.

Commerce Minister Piyush Goyal, in a recent meeting with executives from the auto and allied sectors, instructed IREL to halt the export of rare earth elements abroad—mainly neodymium, a key component for electric vehicle motors, according to one of the sources.

This directive comes as part of India’s broader effort to shield its supply chains amid tightening Chinese exports of critical materials.

So far, the rare earth shipments to Japan have continued under the old bilateral deal. 

IREL has been supplying rare earths to Toyotsu Rare Earths India, a subsidiary of Toyota Tsusho, since 2012 under a government-to-government agreement.

The materials are processed and shipped to Japan for use in high-tech manufacturing, especially magnets.

In 2024, over 1,000 metric tons were exported to Japan—more than a third of IREL’s 2,900-ton production.

However, IREL is keen to renegotiate the terms "amicably", one source told Reuters, citing Japan as a "friendly nation."

IREL has so far relied on exports due to a lack of domestic magnet production capacity, a gap the company now wants to close.

It awaits clearances at four mine sites and is expanding its refining and extraction footprint.

However, because of the existing bilateral agreement, an immediate suspension of supplies may not be legally feasible, a source cautioned.

The government is preparing incentives to attract companies to invest in rare earth processing and magnet manufacturing, aiming to reduce import dependence, especially on China, which remains India's main source of magnets.

In FY25 alone, India imported 53,748 metric tons of rare earth magnets, widely used in EVs, turbines, and medical equipment.

China’s moves trigger global reaction

The push comes in response to China’s export curbs on rare earths since April and echoes the 2010 incident when China briefly blocked supplies to Japan, prompting Tokyo to diversify sourcing.

With global manufacturers alarmed by potential supply chain shocks, India is positioning itself as a long-term alternative, albeit one still years away from full-scale domestic capability.

IREL’s expansion and search for partners

IREL currently operates an extraction unit in Odisha and a refining plant in Kerala.

The company plans to produce 450 metric tons of neodymium by March 2026 and aims to double that by 2030. It is also scouting for a corporate partner to begin rare earth magnet production to support India’s auto and pharma industries.