The scarcity of uncommon magnets and India's reliance on China as a source for them – explored.
The world is currently grappling with a significant challenge in the form of a rare earth magnet shortage, a crisis that has its roots in the complex geopolitics of this critical resource.
China, which controls a substantial portion of the rare earth magnet supply chain, has imposed restrictions on export permits for various materials, including magnets. This has caused chaos in the global market, affecting numerous industries such as automotive, electronics, drones, and appliances.
The US has initiated negotiations with the Chinese government to address these restrictions, while negotiations between India and China, as well as between the US and China, are ongoing. The situation is further complicated by the fact that 90% of the world's magnet-making capacity is controlled by China.
India, which sits on the fifth-largest stash of rare earth magnets globally, is not immune to this crisis. Indian automakers are currently stuck in a queue, waiting for approvals for licenses to export rare earth metals. The approval process involves the Directorate General of Foreign Trade (DGFT), the Ministry of External Affairs, and the Chinese embassy.
The scarcity of rare earth magnets is exacerbated by the challenges associated with their extraction. The process is toxic and emissions-intensive, making it a complex and environmentally sensitive issue.
Rare earth magnets are the strongest type of permanent magnets known to humankind. Their unique properties make them essential for a wide range of applications, from electric vehicles to wind turbines. The ongoing shortage has raised alarm bells for major automotive OEMs, who are struggling to maintain production schedules due to the lack of these vital components.
A research report published by Crisil warns that the ongoing shortage could decelerate India's automotive industry. The report highlights the potential economic impact of the crisis, emphasising the need for swift action to address the issue.
India has sent a delegation of automotive company heads, ministers, and bureaucrats to negotiate with Beijing, but has yet to receive a green signal. The delegation's mission is to secure approvals for the much-needed licenses and to facilitate supply chain adjustments amid these export limitations.
European manufacturers have already started to receive their licenses, indicating a glimmer of hope for the global market. However, the road to recovery is long, and the ongoing negotiations between various global powers will play a crucial role in resolving this complex issue.
In conclusion, the rare earth magnet shortage is a pressing concern that requires urgent attention from global policymakers. The ongoing negotiations between key players, combined with efforts to secure approvals for licenses and facilitate supply chain adjustments, offer a glimmer of hope for a resolution to this crisis. However, much work remains to be done to ensure a stable and sustainable supply of these critical resources for the future.
