REO Reserves

Source: Policy Prism Artwork

Rare Earth Oxide (REO) Paradox

A recent data release on Rare Earth Oxide (REO) reserves makes a surprising revelation. India has roughly 6.9 million tonnes of REO reserves, around 6-7 per cent of the global reserves, placing India as the third largest in the world. China ranks first with 44 million tonnes followed by Brazil with around 21 million tonnes in 2024. Despite this strong position, India’s annual REO mine production remains limited at around 2900 tonnes, standing roughly at 1% of global production levels of approximately 390000 tonnes of REO. This data exposes a paradox- abundant reserves but limited production- that needs attention.

What does the data on Rare Earth Oxide (REO) say?

The table below summarizes top countries by reserves and production of REO.

Source: Policy Prism Compilation using different resources

While China dominates both in terms of reserve holdings and mining, India’s measured reserves are notable but highly under-utilized. These numbers of reserves and production points to the fact that India has a strategic geological advantage but not industrial. Most of the country’s reserves are found in monazite-rich coastal sand which contains thorium, making mining and processing more complex and subject to stricter regulatory measures.

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Why is Rare Earth Mining in India slow?

Core Limitations-

What International Best Practices looks like in Rare Earth Mining?

Country	Value Chain Integration	Strategy Adopted	Results generated	Limitations
China	Complete integration- from mining, to processing to earth magnets.	State-led vertical integration and export control	Scale and cost efficiency	High geopolitical risk
Australia	Mining and some processing	Market-led mining with strategic partnerships	Stable policy giving trusted supplier status	Minimal downstream manufacturing
United States	Not much reserves but good processing capacity to produce magnets and a high-end user	Demand-anchored industrial policy	Strong downstream demand (EVs, defence)	Slow capacity build-up
Brazil	Huge reserves and weak mining	Resource-led, policy still evolving	Large reserves, rising interest	Weak processing ecosystem
India	Large reserves and minimal output	Extraction-focused legacy framework	Geological advantage	Processing bottlenecks, regulatory rigidity

Source: Policy Prism Analysis

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What can be done- A way Forward?

• Targeted industrial planning, procurement guarantees and subsidized capital for separation, refining and magnet production could build capacity and attract private investments. Recent approval of $816 million rare earth permanent magnets manufacturing programme is a welcome step in this direction.
• Allowing private investments in separation or refining subject to strict environmental and social security considerations. Joint ventures with advanced economies can prove to be game changers.
• Fast-tract approvals, incentives for recycling, using of stockpiling are few other measures.

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Conclusion

India’s huge strategic reserves of REO provides a clear message that the problem is not geological but is of industry, policy and execution. The country needs to move this strategic reserve from its survey lists to productive uses by creating processing capacities, magnet manufacturing etc that supports the domestic EV, defence and renewable industries. With timely and accurate regulatory framework and technology adoption, India can move from being a major importer to a meaningful player in coming years.

Contact: policyprism02@gmail.com for research and consultancy