Magnet crisis may be too good to waste

China's near monopoly on rare earths has rattled Indian automakers, triggering a diplomatic push and renewed urgency for local processing capacity. Shine Jacob & Archis Mohan analyse

- Shine Jacob & Archis Mohan analyse

When Beijing announced in April that it would tighten its grip on exports of rare earth-related items, the reverberations were swift and worldwide. The move, enforced by China's Ministry of Commerce and the General Administration of Customs, has sent tremors through the global automobile industry, including India's electric vehicle (EV) sector.

At the G7 Summit that opened on Sunday in Canada, rare earth supplies are high on the agenda. Canadian Prime Minister Mark Carney, laying out the priorities for his country's G7 presidency, spoke of "fortifying critical mineral supply chains" as one of three core missions to shore up economic resilience. Among the leaders invited to the summit is Indian Prime Minister Narendra Modi, whose presence underlines the urgency of the moment.

India's own diplomatic channels have already been activated. Last Thursday, Foreign Secretary Vikram Misri met Chinese Vice-Foreign Minister Sun Weidong in New Delhi and raised the issue of exports curbs on rare earth minerals and magnets. In a statement the following day, the Ministry of External Affairs (MEA) said the two sides agreed to hold a series of "functional dialogues" on economic and trade matters that would encompass discussions on Beijing's restrictions on the export of such materials.

Behind closed doors, New Delhi has made clear its expectation: Predictability and stability in supply chains, in line with international trade norms.

Official sources confirmed ongoing efforts towards early resolution of the issue. On June 5, Indian Ambassador to China Pradeep Kumar Rawat also met with Sun in Beijing, with both sides exchanging views on "issues of common interest and concern," according to readout by Beijing.