India and Australia are currently working on a tight deadline to finalize their interim trade agreement, which is expected sometime in March. This is to be followed by a Comprehensive Economic Cooperation Agreement (CEPA) 12-13 months thereafter. Among key components of the interim agreement is bilateral commercial cooperation across the rare earth elements (REEs) supply chain.
Australia is the fourth largest producer of rare earths, accounting for 6.99 percent of global production. It also holds the sixth largest reserves of REEs in the world.
India, on the other hand, is seeking to modernize its defense ecosystem with new technology and expand renewable energy use. Such developments will require a slew of rare earth minerals. India’s current REE value chain is not sufficiently developed to meet its domestic needs, creating opportunities for commercial cooperation with Australia.
While India has the world’s fifth largest reserves of rare earth minerals, it has not guaranteed self-sufficiency. Rare earths mining and extraction processes are capital intensive, consume large amounts of energy, and release toxic by-products. Also, processed minerals usually take the form of a rare earth oxide (REO), which then needs to be converted into a pure metal before it can be used to manufacture anything.
