Indian Council of World Affairs

Abstract 

This paper analyses the rising demand for Rare Earth Elements (REE) due to their essential role in defence and green technology. Although India holds significant reserves, limited domestic extraction and processing capacity has led to reliance on external sources. Latin America is a strategic option as a region with untapped REE reserves and openness to diversified investment. By strengthening partnership with Latin American countries, India can enhance resource security for India while fostering economic growth and development in the region. 

Introduction

While the global discourse around critical minerals has predominantly centred on lithium, cobalt, and similar resources, Rare Earth Elements (REEs) — a subset of critical minerals—are increasingly acknowledged for their strategic significance. Although REEs feature among the 30 critical minerals identified by the Government of India^[i], their distinctive role in advanced technologies and the associated supply chain vulnerabilities necessitate targeted policy and technical focus. Despite the presence of considerable domestic reserves, India currently lacks the requisite extraction capacity at scale, due in part to technological and infrastructural constraints. Given the essential function of REEs in defence systems and green technologies—particularly in the manufacture of permanent magnets — India has initiated efforts to develop indigenous extraction capabilities. In parallel, the search for reliable external sources remains a strategic imperative. Within this context, Latin America represents a viable opportunity, offering both substantial untapped reserves and a growing willingness to diversify foreign investment. Strategic engagement with countries in the region may therefore yield long-term, mutually advantageous outcomes.

Growing Need of REE in India

Rare earth elements comprise 17 elements, which include Scandium (Sc), Yttrium (Y), and the 15 Lanthanides [Lanthanum (La), Cerium (Ce), Praseodymium (Pr), Neodymium (Nd), Promethium (Pm), Samarium (Sm), Europium (Eu), Gadolinium (Gd), Terbium (Tb), Dysprosium (Dy), Holmium (Ho), Erbium (Er), Thulium (Tm), Ytterbium (Yb) and Lutetium (Lu)] in the periodic table. These elements are divided into two groups: Light Rare Earth Elements (LREEs) and Heavy Rare Earth Elements (HREEs).^[ii]

Though the strategic value of each REE differs, some critical sectors have seen an increasing demand for such elements. In defence and aerospace, neodymium and samarium-based magnets are utilised in missile guidance systems.^[iii] REEs are also incorporated in heat-resistant alloys and other advanced weaponry. To achieve the net-zero goal by 2070,^[iv] India needs to ensure a reliable supply of REE along with lithium, cobalt and nickel, which act as the backbone of green technologies. In particular, neodymium and dysprosium are essential for permanent magnets used in wind turbines. Each megawatt of wind capacity requires approximately 200 kg of rare earth materials.^[v] Elements like europium and terbium are utilised in electronics and telecommunications. Petroleum refining involves the use of cerium and lanthanum to increase efficiency.

In 2023, India was the 17^th-largest importer of rare earth metal compounds in the world, worth $13.1 million.^[vi] This is significant as India has the fifth-largest rare earth reserves in the world, estimated at 6.9 million metric tonnes, though it was only able to produce 2,900 metric tonnes in 2023.^[vii] This gap highlights the urgent need for India to build its extraction and processing capacity in order to develop a domestic rare earth value chain that can meet the growing strategic demand. Given India’s accelerating push toward defence modernisation, clean energy and technological self-reliance, the demand for rare earth elements is poised to rise sharply. Aligning domestic capabilities and strategic partnerships with these sectoral needs is essential to secure and sustain future consumption trends.

REEs in Defence Technology

The exceptional electrochemical attributes of rare earth elements make them applicable to many leading technologies. As mentioned above, many REEs are utilised for the manufacturing of permanent magnets, thus having great value in defence systems. Today, global defence capabilities depend on an array of advanced technologies, which include magnets, sensors, radars, sonars, lasers and communication systems, and all of them rely on specific rare earth elements.^[viii]

The Defence Metallurgical Research Laboratory (DMRL) has successfully developed Rare Earth Permanent Magnets (REPMs) using Samarium Cobalt 5 (SmCo₅) and Neodymium Iron Boron (Nd-Fe-B), achieving high energy density permanent magnets, specifically in the range of 18 to 35 Mega Gauss Oersteds (MGOe) — a measure of its magnetic strength — that enable miniaturisation and performance stability.^[ix] These magnets are being used in major defence technologies like fin actuators in infrared-seeking missiles for precise target tracking, smart compact high-torque motors in aircraft and armoured vehicle systems and lightweight high-efficiency propulsion units in UAVs — all of which improve endurance, responsiveness and operational capability across the platforms.

Radar systems — particularly high-performance types like Active Electronically Scanned Array (AESA) — rely on Transmit and Receive (T/R) modules, where yttrium plays a critical role. In the realm of sonar and undersea acoustics, samarium-based components are essential for detecting underwater threats. Additionally, terbium is a key element in terfenol-D, a magnetostrictive material widely used in sonar and other acoustic devices.

Rare earth-doped garnets (e.g., yttrium iron garnet) are used in fibre-optic gyros for angle sensing in missiles and aircraft.^[x] Neodymium and Yttrium are also incorporated in Neodymium-doped Yttrium Aluminium Garnet (Nd:YAG) lasers, which are critical for laser-guided weaponry.^[xi] Europium (Eu) and terbium phosphors generate the green emission used in night vision technology.^[xii] Having a steady supply of neodymium, dysprosium, samarium, terbium and yttrium is essential to sustaining and enhancing defence capacity.

India’s Rare Earth Dependency

As we look into the sources by which India acquires these REEs, a pattern emerges: the majority of these REEs are imported by India. China’s policy shift of tightening bureaucratic controls and mandating trade licences for rare earth exports is a significant development that has happened recently in the escalating global race over rare earth elements. Although India’s current REEs consumption is low and is not yet vulnerable to supply chain disruptions, the growing demand in the future could make this import dependency a risk to supply chain stability.

Official data from Press Information Bureau India shows an increase in imports from 1848 tonnes in FY 2019–20 to 2270 tonnes in FY 2023–24.^[xiii] The bulk of these came from China, with a smaller share coming from Japan, Russia, Korea, and a few other countries. For example, in FY 2023 to FY 2024, India imported about 1,185 tonnes of rare-earth metals; China alone supplied 699 tonnes (59%). Other suppliers in 2023–2024 included Hong Kong (234 tonnes), Japan (192 tonnes) and Mongolia (60 tonnes).^[xiv] Overall, India remains highly import-dependent, with Chinese exports dominating by a large volume.

This import dependency of India is formed due to the Chinese domination in global REE mining and processing. Presently, China accounts for 60%–70% of the world’s REE mine supply and around 85%–90% of the processing/refining capacity.^[xv] This dominance extends to value-added products. Indian manufacturers rely on Chinese-made rare-earth magnets and alloys. In 2024, India was the fifth-largest global importer of high-power Neodymium-Iron-Boron (NdFeB) magnets from China, importing 2850 tonnes (+49%) over the previous year.^[xvi] To summarise, China dictates the majority of the midstream/downstream market for REE products and, therefore, forces the REE-dependent industries in India to source the majority of their supply input through China.

When looking at alternatives, in the past few years, Latin American countries like Chile, Argentina, Bolivia, Peru and Brazil have emerged as a hotspot for exploring critical minerals and REEs. At the moment, the majority of the focus of both India and China is on the exploration of lithium and cobalt, but these countries also have potential REE reserves, which are yet to be explored.

Harnessing Latin America’s REE Potential

Latin America is blessed with natural resources, and in several countries, REEs are a key component of their untapped mineral wealth. In Goiás, located in central Brazil, Catalão City has the largest reported reserves^[xvii] and last year, the US-led Mineral Security Partnership (MSP) started a coalition project in the Pela Ema deposit with the Serra Verde Group.^[xviii] The Rocha da Rocha Critical Minerals Province, located in Bahia, northeastern Brazil, contains significant amounts of monazite sand with a high concentration of rare earth oxides (45%).^[xix] Similarly, the Biobío region of Chile has a six-square-kilometre-large Penco module that hosts ionic clay deposits, which are rich in HREEs, such as dysprosium (Dy) and terbium (Tb)^[xx], essential in permanent magnets. In the Jujuy province of Argentina, the Susques properties, which cover more than 415 square kilometres in area, are known to be a prospect for a variety of rare earth elements, including yttrium.^[xxi] There are also occurrences of REEs in the Salta and Catamarca provinces, which are part of the Lithium Triangle.^[xxii] Cerro Manomó, one of Bolivia’s most studied REE sites, is being explored by the Bolivian Mining Corporation (Comibol), which is planning to invest around $3 million in the region.^[xxiii] Lastly, in Peru, the Capacsaya area near Cusco city has been identified as an important site, as exploration revealed the presence of elements, such as neodymium, lanthanum, cerium, europium and yttrium.^[xxiv]

For Latin American countries, REE resources are strategic assets, and these nations are keen to capitalise on them. Exports of natural resources form an important part of these growing economies; hence, there are opportunities for these countries to diversify their export basket. Not only will this enable higher financial revenue in the short term but it may also allow them to develop financial capital for future economic endeavours.

This will also help boost employment and regional development, especially in regions like north-eastern Brazil and north-western Argentina.^[xxv] Furthermore, by establishing themselves as reliable non-Chinese suppliers of REEs, they also gain geopolitical leverage for attracting strategic investments, technology transfers and developing infrastructure partnerships with major consumers like the US, the EU, Japan and India.

India’s entry into Latin America’s critical mineral sector is in its nascent stage. The 2024 Critical Minerals Mission has a target to establish mining projects overseas, but most of these are currently focused on lithium and other battery metals rather than REEs. In 2024 and 2025, several deals were negotiated for mining on a state level. India’s state-owned company Khanij Bidesh India Ltd. (KABIL), which was established in 2019, has taken major steps. KABIL started a $24 million project in Argentina to explore five lithium blocks.^[xxvi] At the India-Chile mining forum in April 2025, India’s Minister of Mines promoted greater cooperation on copper, lithium and other critical minerals.^[xxvii] However, no large REE mining project has been announced so far by India in Latin America, these agreements and the upcoming ones in the sector can act as a platform for exploration partnerships for REE reserves.

Latin America’s push to diversify its FDI and economy presents both opportunities and challenges for India. The region has vast unexplored REE potential, especially Brazil, which has the world’s third-largest REE reserves and has recently started investing heavily in REEs.^[xxviii]

Through projects like the Laneshift initiative, India collaborates with Latin American cities like Curitiba and Rio de Janeiro in Brazil, Mexico City in Mexico, Bogotá and Medellín in Colombia, and Quito in Ecuador for the development of EV infrastructure and deployment of electric trucks to reduce emissions.^[xxix] This acts as an example of a mutually beneficial agreement between India and Latin American countries, which can be referenced for future collaborations. Mineração Serra Verde, a Brazilian mining company, has announced a $170 million investment to produce four rare earth elements (REEs), which comprise neodymium, praseodymium, dysprosium, and terbium — essential components in electric vehicle (EV) motors and wind turbine generators.^[xxx] Such developments are critical for India to foster partnerships. India’s domestic needs for REE supply in defence and EV match Brazil’s interest in getting capital investments and technology. India’s involvement in bilateral and multilateral agreements like the India-US critical minerals pact and Minerals Security Partnership (MSP) may help it to secure a foothold in Latin American markets. By utilising the India-US critical minerals pact and its membership in the US-led MSP, India can connect with US-based networks and attain best practices for sustainable mining in Latin America. Both partnerships act as a window for co-investment opportunities like joint ventures in emerging REE projects.^[xxxi] Also, India’s association with MSP bolsters its credibility to demonstrate a shared commitment to global mining standards and responsible environmental practices, positioning India as a partner of choice among Latin American governments. Finally, it also provides access to advanced extraction and processing technology, accelerating India’s ability to develop and secure a stable and diverse supply of REEs.^[xxxii] India’s interest in REEs extends beyond trade to include sectors such as scientific collaborations, research and development and developing joint ventures with Latin American countries to establish mutually beneficial partnerships.

Conclusion

For India, as REE integrated components increasingly proliferate in its most strategic sectors, defence modernisation to clean energy transitions, the country should prioritise establishing dependable production and diversifying its supply partners to enforce secure access to such critical resources and deny disruptions. Latin America, with its under-tapped REE deposits in Argentina, Chile and Brazil, offers a path towards a symbiotic relationship replete with mutually accrued benefits. While India will achieve its goal of securing access to REEs, Latin America will benefit economically and the path to its export and economic diversification will widen.

*****

*Arpit Tyagi, Research Intern, Indian Council of World Affairs, New Delhi
Disclaimer: Views expressed are personal.  

End notes

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