India’s rare earth deals with Canada and Brazil: Reducing China dependence, boosting strategic autonomy

Prime Minister Narendra Modi and his Canadian counterpart Mark Carney inked a critical mineral and uranium deal as India and Canada prepare to soon finalise a Comprehensive Economic Partnership Agreement (CEPA), a free trade pact, by the end of this year and target $50 billion trade by 2030. The two countries clearly seek to move past years of diplomatic friction to get economic ties back on track. The $2.6 billion uranium deal will work on building small modular nuclear reactors and advanced reactors.

Canada holds some of the largest known resources of rare earths globally, estimated at over 15.2 million tonnes. The manufacturing of permanent magnets is the largest global use for rare earth elements (REEs), accounting for 48 per cent of total demand. Although many countries, including Canada, have REE reserves and resources, producing these metals involves complex separation and refining processes.

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Earlier, Brazilian President Luiz Inacio Lula da Silva visited India 18–22 February. The two nations signed a critical minerals deal ostensibly to curb dependence on China. PM Modi hailed the agreement on critical minerals and rare earths as a “major step towards building resilient supply chains”. China dominates the mining and processing of the world’s rare-earth and critical minerals and has increased its grip on exports in recent months as the United States attempts to break its hold on the growing industry.

After China, Brazil is the world's second-largest holder of critical minerals, which are used across a range of fields, including electric vehicles, solar panels, smartphones, jet engines, and guided missiles. Brazil is India’s largest trading partner in Latin America, and its growing cooperation with Brazil on critical minerals follows recent supply chain engagements with the US, France and the European Union.

India and the USA have been pushing cooperation on critical minerals, essential materials like lithium, cobalt and rare earths used in electric vehicles, semiconductors and clean energy technologies, announced External Affairs Minister S Jaishankar as he expressed support for the US-launched Forum on Resource Geostrategic Engagement (Forge), part of the evolving critical minerals partnership framework.

Rare Earths and Their Applications

Rare earth elements (REEs) are a group of 17 metallic elements, scandium, yttrium, and the 15 lanthanides, that are crucial for many modern technologies, including electronics, clean energy, and defence, and underpin over 200 advanced applications. Rare earth elements (REE) are the “vitamins” of modern industry. Although their name suggests rarity, they are not scarce in the Earth's crust, but rather, they are difficult to mine because they are dispersed and not found in high concentrations in economically viable deposits. They are lustrous, silvery-white, soft, and somewhat reactive metals. Their unique chemical, magnetic, and optical properties make them vital for applications like strong permanent magnets for electric motors, wind turbines, and consumer electronics; components in smartphones, laptops, and televisions; keys in rechargeable batteries, electric vehicles, and other clean energy technologies; lasers; glass polishing; catalytic converters; and medical imaging (MRI).

Neodymium enables powerful magnets in electric motors, and europium is essential for the vibrant colours of screens. These properties cannot be easily substituted, making REEs critical even in minute quantities. They appear in everything from smartphones and laptops to wind turbines, LED lighting, electric vehicles, drones, and precision defence systems. Without REEs, the productions of many high-tech, green, and even medical innovations would be severely constrained.

REEs are critical for national security and military applications, such as guidance systems, radar, and stealth technology. Every Lockheed Martin F-35 fighter jet, for example, is engineered with more than 420 kg of rare earths. More than 2,500 kg of rare earths support a large Arleigh Burke-class guided missile destroyer, and each Virginia-class submarine requires more than 4,500 kg of the sought-after metals. The push for renewable energy, such as wind turbines and solar panels, is a major driver of demand. REE are also used in products like catalysts for petroleum refining, glass, and alloys.

Rare Earths and Unfolding Geopolitics

Goldman Sachs, in its October 2025 report, has flagged risk of disruption in the supply of rare earths and key minerals. The report says that a rare-earth disruption of 10 per cent could cut global output by $150 billion. Light REE could be future targets for curbs as China expands REE export controls. The mounting risks to global supply chains of rare earths and other critical minerals, with China's dominance in mining and refining, are of concern. China controls 69 per cent of global rare earth mining, 92 per cent of refining, and 98 per cent of magnet manufacturing. China keeps selectively expanding export curbs on rare earths for semiconductor users to get better trade deals. China is leveraging its near-monopoly on REEs as a strategic weapon against the US by implementing export restrictions and technology bans, particularly on heavy rare earths essential for defence and high-tech industries.

REEs have become a flashpoint in geopolitics, as they are critical to high-tech industries and essential in uses from batteries to computer chips, artificial intelligence, and defence equipment. Therefore, more nations are seeking to build independent REE and magnet supply chains. Samarium, graphite, lutetium, and terbium are particularly vulnerable to export curbs. Samarium, used in heat-resistant samarium-cobalt magnets, is key for aerospace and defence. Cerium and lanthanum are reportedly future targets for curbs. Neodymium-praseodymium oxide (NdPrO) is critical for making magnets.

Heavy rare earth elements were particularly scarce outside China and Myanmar, with most known deposits being small, lower-grade, or radioactive. Developing new mines requires eight to 10 years. Refining REEs requires advanced expertise and infrastructure, with builds typically taking five years. Barriers from geological scarcity to technological complexity and environmental challenges remain substantial. Western producers’ reliance on China remains significant.

Alternative Supply Sources

China’s dominance is the result of decades of state policy. While China holds a near-monopoly and efforts are underway to develop new mines and processing facilities in countries like the US, India, and Australia. Trade networks are evolving, with some Asian countries forming a more cohesive trade community that could play a greater mediating role in the China-U.S. trade relationship.

While REE are not geographically scarce, economically viable concentrated deposits are rare, especially for heavy rare earths. Countries with the largest reserves include China, Brazil, Canada, and India. Global production of rare earth oxides has nearly tripled since 2017, with production closing toward 390,000 metric tonnes in 2024, driven by increasing investment in renewable energy and electric vehicles.

Rare Earths in India

India has the world's fifth-largest REE reserves but produces a very small fraction. The main source is monazite sand, primarily found along the eastern and southern coasts. Production has been slow due to factors like difficult-to-extract resources, regulatory hurdles, and a lack of downstream industrial infrastructure beyond initial extraction. To meet its goals for clean energy and strategic autonomy, India is working to overcome these challenges through government initiatives, exploring partnerships, and developing its domestic supply chain, but it remains a major importer.

Despite large reserves, India's production is low, at around 2,900 tonnes per year, accounting for less than 1 per cent of global output. India's reserves have a low grade and are linked with radioactivity, making extraction long, complex, and expensive. Securing new mining permits, obtaining environmental and forestry approvals, and dealing with residential settlements have created significant operational constraints for the state-owned Indian Rare Earths Limited (IREL). While India has facilities for mining to refining into oxides, it lacks industrial-scale facilities for downstream processes like producing alloys and magnets.

Setting up a complete rare earth supply chain requires massive investment and takes about a decade to get operational. Reducing dependence on China, which currently dominates the global market, is a key driver for India's efforts. A reliable domestic supply is crucial for India to meet its 2070 net-zero target, as rare earth elements are essential for wind turbines and electric vehicle motors. The government is trying to incentivise private investment and develop a complete domestic supply chain. India is exploring new deposit locations and potential global partnerships to boost its capabilities.

The Union Budget 2026–27 announced Dedicated Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu for mining, processing, research, and manufacturing of Rare Earth Permanent Magnets (REPMs). The Rs 7,280 crore REPM manufacturing scheme was approved in November 2025. 6,000 MTPA integrated REPM capacity to be created. Rs 6,450 crore sales-linked incentives over five years. Rs 750 crore capital subsidy for advanced facilities. The Geological Survey of India (GSI) has identified 482.6 million tonnes of rare-earth ore resources.

Strategic Importance for India’s Future

REE are important enablers in four strategic areas. REEs are essential for renewable energy technologies, from the powerful magnets in wind turbines to catalysts in solar panels and batteries in electric vehicles. Expanding domestic rare earth capacity supports India’s climate targets and energy security by nurturing a local clean-tech industry. As India furthers the digital economy and manufacturing of electronics (smartphones, computers, and consumer electronics), access to rare earths provides supply security. It is also the foundation for the development of electric and autonomous vehicles, drones, and other new transportation.

Defence systems like guided missiles, radar, lasers, and communication systems depend extensively on REE-based parts. Domestic production of rare earths will enhance national security by lowering India’s geopolitical risk exposure to supply shocks. Lastly, by producing rare earths domestically, India can not only save on expensive rare-earth imports but could also create high-value export materials.

Way Ahead for Expanding India’s REE Capabilities

Since April 2025, Beijing has imposed strict export controls on seven kinds of rare earth metals and related magnets, including samarium. China’s Ministry of Commerce stated that these materials serve both civilian and defence-related purposes and that any future exports would be subject to approval through specially issued licences. This move shook the global supply chains, particularly in defence, EVs, and high-tech manufacturing sectors. Currently, China dominates the global production of samarium, serving as the primary supplier worldwide.

Samarium is an essential element for advanced military applications and stands out for its strategic indispensability. Beijing’s timings for controlling the supply chains for rare earths are not accidental. It comes at a moment when the Western and allied military powers have strained their military resources due to the prolonged battles in Ukraine and the Gaza Strip. That puts greater onus on India to act more quickly.

India’s vision of self-reliance fuelled by pandemic-era supply disruptions placed REEs at the centre of its economic and security strategy. REEs are not truly scarce. Mining these elements is technically complex. Concentrated, economically viable deposits are rare, especially for heavy rare earths. For decades, China has dominated the global REE market and, even today, controls nearly 70 per cent of global output. The United States and Myanmar each account for around 12 and 8 per cent respectively, with Australia, Thailand, Nigeria, and others sharing the remainder. India’s own output is currently a small slice, about 1.0 per cent of the world’s supply.

China, Brazil, and India are reported to have the largest reserve bases, followed by Australia, Russia, Canada, Vietnam, the US, and Greenland. Now one knows why President Trump wants to take over Greenland. Geopolitical tensions and the clean energy transition are encouraging the diversification of supply chains from China.

India possesses an estimated 35 per cent of the world’s beach sand mineral deposits (a rich source of rare earths). Despite this potential, India’s actual production has remained modest. Realising this potential requires bridging the gap between reserves and production, which is crucial. This vast resource, if fully tapped, could position India as a key long-term supplier. Mine production of rare earths in India has to go up significantly and quickly.

Setting up the Rare Earth Theme Park Initiative will support establishing pilot plants and demonstration facilities across the value chain, fostering entrepreneurship and skills development. Odisha Sands Complex (OSCOM), a flagship unit of Indian Rare Earths Limited (IREL), is expanding its processing capacity, notably for mixed rare earth chlorides, and upgrading its mineral handling infrastructure, including a private freight terminal and a new de-salination plant.

A planned rare earth permanent magnet plant will produce 3,000 kilograms of magnets for defence and clean energy applications. Joint ventures, such as IREL-IDCOL (Industrial Development Corporation of Odisha), are building new mining and separation plants to mine coastal sand deposits in Odisha. In Bhopal, a proposed Rare Earth and Titanium Theme Park aims to commercialise laboratory-scale technologies for extraction and processing, creating an innovation hub for the sector.

The government aims to triple the country’s rare earth oxide production capacity by 2032 to meet growing industrial and export demand. Private industry is also stepping up. In late 2024, Trafalgar Engineering announced plans for India’s first integrated plant to produce rare earth metals, alloys, and magnets. Such facilities would fill a critical gap in the value chain, allowing India to go beyond the mining of raw materials and proceed up the value chain toward the production of finished, high-technology goods. All these feed into a combined effort to form a 100 per cent domestic supply chain, from exploration and mining to processing and the end-use manufacturing process.

Some major private firms in India involved in rare earths include Vedanta Group, Hindustan Zinc Limited (a Vedanta subsidiary), Hindustan Copper, Mahindra, Uno Minda, and JSW Group, which are either already in the sector or have shown interest in developing a rare earth magnet ecosystem. India is also advancing Quad-based mineral cooperation and Production-Linked Incentive (PLI) incentives to reduce rare earth dependency.

The European Union is making a significant shift in its approach to resource security, preparing to launch a strategic stockpiling programme for critical minerals. Japan, South Korea, and the United States have long maintained national stockpiles; this move underscores a broader securitisation of critical mineral supply chains. But while stockpiling may offer short-term resilience, it reflects a largely unilateral response to a broader global challenge. India may also have to do the same, like strategic crude reserves. India-EU strategic partnership encourages technology transfer and cooperation on critical minerals to secure supply chains, as highlighted by experts.

India’s rare earths plans are at an inflection point. With KABIL (Khanij Bidesh India Ltd) and mining reforms, India is securing overseas assets and opening its rare earth sector to private players. With ample reserves, a growing global demand and strong policy support, India has what it takes to become a strong player in the world regarding rare earth elements.

The government’s sweeping reforms and incentives are a sign of its determination to turn mineral wealth into national power. The challenges in technology and regulation will be demanding, but India’s long-term perspective is clear: to translate its rare earth possibilities into economic growth, technological leadership, and strategic security. In an era where power projection extends beyond borders into supply chains and resource dependencies, India must rethink its national security architecture.

Recognising rare earths as strategic assets, the Indian government launched initiatives to develop the sector. These efforts blend policy reform, funding incentives, and infrastructure projects to create a robust domestic rare earth ecosystem. The budget 2026-27 has greatly incentivised the critical minerals and REE sector.

India aims to reduce its 80-90 per cent import dependence on China for REPMs by establishing 6,000 MTPA manufacturing capacity, supported by a Rs 7,280 crore scheme. The new corridors will connect mining, processing, and manufacturing, specifically targeting coastal areas rich in monazite deposits. The initiative is part of the National Critical Mineral Mission to secure long-term supplies for high-tech sectors like EVs and wind turbines. Rare earth resilience is no longer merely an industrial challenge but a geopolitical imperative.

(The writer is former Director General, Centre for Air Power Studies. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.)