The impact of the trade tussle between the US and China has engulfed the entire world with Beijing restricting the export of rare earth minerals. China being the producer or supplier of 90 per cent of the world’s rare earth minerals, the move has hit sectors such as defence, energy, automobile makers, aerospace manufacturers and semiconductor companies across the globe, including India. In order to dwell on how we can effectively deal with this crisis, let’s first take a look at how it all began.
China’s ‘Trump’ Card: Restriction on Rare Earths
The United States, under President Donald Trump, launched a tariff war against many countries, including China, in February this year. It reached a highpoint on April 2, when Trump imposed an additional 34 per cent tariff on most Chinese goods, in addition to the already existing 20 per cent.
Just two days later, in retaliation, China not only imposed a 34 per cent tariff on all US imports, but also placed certain restrictions on the export of some rare earth minerals. There were further tariff escalations on both sides in the following days, but let’s focus on the rare earths.
On April 4, Beijing made end-use declarations (from importers) mandatory for Chinese exporters to obtain special licenses for exporting seven rare earths. These included: Yttrium, Gadolinium, Samarium, Terbium, Lutetium, Dysprosium, and Scandium.
Now, it’s not as easy as it sounds. As per an NDTV World report, China does not have an effective mechanism in place to issue these licenses and it could be a long-drawn process to obtain them. Describing the current scenario, an Economic Times report states that Beijing has held back several shipments of rare earths at its ports.
What Are Rare Earth Magnets?
There are 17 rare earth elements and a rare earth magnet is a magnet that is made from any of these 17 elements. They are considered to be the strongest permanent magnets available to us today.
Interestingly, quite contrary to what they are called, these elements aren’t actually rare. According to MagnetSource, they are more or less as abundantly found in the earth’s crust as metals such as copper and zinc. So, why are they called ‘rare’ then? Well, that’s because these elements are never found in large, concentrated amounts. They are usually found mixed with other elements, which makes their mining and processing a very expensive affair. This is why it is produced in very few countries, with China leading the contingent.
Rare Earth Magnets: Main Uses
These magnets are used in a wide range of everyday applications such as hard disk drives, speakers and headphones, smartphones, MRI machines, and wind turbines, among others. While they are used in the conventional ICE (Internal Combustion Engine) vehicles, as per a Mint report, they are indispensable when it comes to Electric Vehicles (EV) and Hybrid Vehicles (HEV). They are popular because of their energy efficiency, compact size and also high torque. According to a New York Times (NYT) Report, these magnets are 15 times more powerful than iron magnets of the same size.
Their indispensability can be gauged from the fact that the motor for adjusting the seats in a luxury car could have up to 12 of these rare earth magnets. Market Brew quotes another NYT report, saying that a single electric vehicle may need 1–2 kg of these magnets.
Export Ban: Impact On India
While the impact of the restrictions is being felt world over, let’s look at how it has affected India in particular. As per report in The Economic Times, India imported 870 tonnes of rare magnets valued at INR 306 crore, in FY 2025.
In India, the ban is likely to hit the Electric Vehicles (EV) industry the most. While the Government of India is encouraging EVs in order to reduce emission levels, the paucity of these magnets could cause production delays. A Mint report quotes Ravi Bhatia, President and Director of JATO Dynamics India, who fears that China’s restrictions could cause manufacturing delays ranging between two and six months.
The financial implications are staggering, too. Reason: As per IDTechEx, rare earth magnets cost 50 per cent of the total cost of an electric motor. Also, while they cost less than 5 per cent of the total price of a commercial EV vehicle, they constitute 30 per cent of its motor cost. Mr Bhatia says that supply shortage of these materials strengthens the grim possibility of a price hike by 5 to 8 per cent. For example, if you are planning to buy an electric car that currently costs INR 20 lakh, post a five per cent hike in price, it could cost you INR 21 lakh!
It’s not just the automobile industry that’s feeling the heat. According to an Economic Times report, the electronic industry is also staring at bleak times ahead, with rare earths being integral parts of wearables, televisions and audio products such as speakers. The Electronics Industries Association of India (ELCINA) has said that shortage has led to manufacturing disruptions, thus causing delayed deliveries.
What’s The Solution?
The only way to solve the crisis is to find a timely, cost-effective replacement for these rare-earths. And, yes, there are several suggestions doing the rounds, including usage of Niron magnets and recycled magnets.
IEEE, a global community of technologists, notes how government agencies, private companies, and even universities across the world are working to achieve the rare earths-free-technology goal. For example, in the US, big names in the automotive industry such as General Motors and Stellantis have already collaborated with a start-up, Niron Magnetics, to develop EV motors free of rare earth magnets. Tesla, too, has declared that its “next drive unit,” while based on permanent magnets, will avoid “rare earth elements”.
In India, ferrite magnets are being seen as a viable option as they cost considerably less and are also more easily available. In fact, in their innovative and bold attempt to go rare earth-free, several start-ups in the country are now using ferrite magnets in motor technology. A recent BusinessLine report names Conifer, Chara Technologies, and Viridian Igni Propulsion as companies that are making a significant shift in this aspect. Several other companies, too, are exploring options to decrease or even end their dependence on rare earths.
According to a report by IMARC, a global management consultant firm, an increasing need for energy-saving options, along with the Government of India’s emphasis on domestic manufacturing and reduced dependence on imports, are also boosting the demand for ferrite magnets. While India’s demand for ferrite magnets was 61,650 tons in 2024, it’s estimated to reach 74,840 tons by 2033.
Why Are Ferrite Magnets Popular?
Easy availability and cost-effectiveness aren’t the only reasons behind the rising preference for ferrite magnets. While they do have limitations such as brittleness and lesser magnetic strength, let’s take a quick look at some of their major advantages.
To begin with, they are extremely resistant to corrosion, which makes them ideal for applications that are exposed to water and moisture. They can also resist high temperatures and can be easily manufactured in various sizes and shapes, depending on the requirement. Further, they offer strong resistance to demagnetisation, which makes them ideal applications that deal with shifting magnetic. Ferrites can also be magnetised in multiple directions to meet specific requirements – be it diametric, axial, or multipole magnetisation.
Conclusion
With China’s latest clamp-down, attempts are being made world over to switch to rare earth-free technology. According to Market Brew, Indian auto manufacturers hope to make the shift possible as early as 2027. IDTechEx estimates that by 2035, close to 30 per cent of the global EV market would be operating on rare earth-free motors.
The goal is clear and the intent strong. Breaking free from rare earths could be advantageous in multiple ways: It could not only curtail the geopolitical leverage China enjoys using their near-monopoly in this sector, but also protect the planet from the detrimental effects of rare earth mining.