October 27, 2010 / 10:53 AM / 9 years ago

India aims for 2011 rare earth exports: official

NEW DELHI (Reuters) - India aims to restart production of rare earths late next year for the first time since 2004, a top government official said on Wednesday.

The Indian government is spending 1.4 billion rupees ($32 million) on a 5,000 metric ton capacity plant in Orissa, amid global concerns China may be taking advantage of its dominance of resources to squeeze export supply.

R.N. Patra, chairman and managing director of state-run Indian Rare Earths Limited, told Reuters his firm has environmental clearance to produce the hi-tech minerals at a plant under construction in eastern state Orissa.

“India had stopped producing rare earths in 2004 due to lack of market competitiveness, but now we have improved in-house technology to be more competitive,” Patra told Reuters.

“Going by our domestic demand there should be enough for exports,” he said.

A major consuming market is Japan, where Indian Prime Minister Manmohan Singh and his Japanese counterpart Naoto Kan agreed this week to cooperate on minerals and metals.

The near-monopoly China has in producing 97 percent of the world’s supply of rare earths has long been known among industrial users, but it came under the international spotlight after reports Beijing halted shipments to Japan over a territorial dispute with Tokyo last month.

China also rocked the hi-tech industry and boosted metals prices in July when it announced it would reduce export quotas for rare earth minerals by 72 percent for the second half of 2010, extending a trend of cutting rare earth exports since 2008.

India and Japan are also trying to agree a civilian nuclear deal which will allow the use of Japanese technology and investment in developing India’s nuclear power sector.

“Demand for rare earths is mostly in developed countries such as the United States, Japan, Europe and Canada. There is great demand in Canada,” Patra said.

“Indian domestic demand was about 200 (metric) tons a year in 2004. That may have gone up somewhat but we still think we will have a lot to export,” he said.

Rare earths can be used for both civilian and military purposes, including in nuclear applications.

Beijing has denied any plans to choke off shipments of the minerals. Chinese state media have criticized foreigners for making “unreasonable” demands on resources China needs for its own industrial development.

Editing by Surojit Gupta and Daniel Magnowski

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