India has asked state-run miner IREL to suspend a longstanding agreement to export rare earth elements to Japan, in a bid to shore up domestic supplies and reduce reliance on China, two sources with direct knowledge of the matter told Reuters.
The request, made during a recent meeting between Commerce Minister Piyush Goyal and industry executives, comes as global supply chains face pressure from China’s tightening grip on rare earth exports. The directive targets an agreement inked in 2012 between IREL and Toyotsu Rare Earths India, a unit of Toyota Tsusho (8015.T), which processes materials in India for export to Japan.
“IREL has been asked to stop exports of neodymium, a key rare earth used in EV motors,” one source said. The sources requested anonymity due to the sensitivity of the discussions. India’s Commerce Ministry, IREL, and the Department of Atomic Energy, which oversees IREL, did not immediately respond to Reuters’ inquiries.
The move highlights India’s ambitions to build its rare earth value chain, as China’s recent curbs on exports of key minerals have rattled global industries. Toyotsu exported over 1,000 metric tons of rare earth materials from India to Japan in 2024—nearly a third of IREL’s annual output of 2,900 tons, according to trade data.
IREL’s exports stemmed from a lack of domestic processing capacity. But as China curtails global supply, IREL wants to keep materials within India and boost local extraction and processing. The company is awaiting approvals for four new mines and plans to produce 450 metric tons of neodymium in the fiscal year to March 2026, aiming to double that by 2030, a second source said.
India, which holds the world’s fifth-largest rare earth reserves, currently lacks magnet production facilities and imports nearly all its magnet requirements—53,748 tons in FY2024–25, primarily from China. IREL is now seeking a corporate partner to establish rare earth magnet manufacturing, particularly for the automotive and pharmaceutical sectors.
While India may face delays in halting exports to Japan due to the bilateral nature of the agreement, the government wants the issue to be “amicably negotiated,” one source said. Japan’s Trade Ministry declined to comment on bilateral talks.
Amid rising geopolitical tension and trade uncertainties, India is also finalising incentives to attract companies to set up rare earth processing and magnet production domestically, Reuters reported earlier this month.