SUPPLY LINK FROM MINE TO MAGNET

ARE earth magnets are the invisible force behind the world's transition to electric vehicles, renewable energy, and cutting-edge defence systems.

- DAVINDER SANDHU

At the heart of these technologies lies a small but indispensable component: the neodymium-iron-boron permanent magnet. Without it, electric motors stall, wind turbines falter, and advanced missile systems lose precision. India, despite its sizeable rare earth reserves, has no domestic capacity to produce these critical magnets. We have to address this strategic blindspot that could cripple the country's ambitions in EVs, renewables, and defence unless addressed immediately.

Why the markets won't solve this The rare earth supply chain is notoriously capital-intensive and high-risk. Developing a mine-to-magnet project can take 5-10 years, with massive upfront costs and no guaranteed cash flows. Traditional project finance models do not work here as banks see too much risk and not enough precedent. Experience shows the market has been flooded to drive down prices and kill off competitors multiple times. No investor will risk capital in a sector where prices can fall below the cost of production overnight due to geopolitical manipulation.

Under these conditions, mere funding support engineered through grants and tax concessions may be sub-optimal. Governments must support an enterprise with an assured offtake and price over its lifetime. In effect, the private sector takes on the technology and production risk, and the government takes on the complete market and revenue risks.