Rare Earth Corridors
Context:
The Budget’s focus on Rare Earth Corridors (RECs) reflects a sharp understanding of the geopolitics of manufacturing.
By supporting mineral-rich States such as Odisha, Kerala, Andhra Pradesh and Tamil Nadu to develop integrated corridors spanning mining, processing, research and manufacturing, the government is addressing a critical vulnerability in global supply chains.
Rare Earth Metals:
According to the International Energy Agency (IEA), they comprise 17 metals, typically grouped into
Light rare earths (LREEs) — including lanthanum, cerium, praseodymium, neodymium, samarium and europium
Heavy rare earths such as gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium, scandium and yttrium.
Promethium is not included in the list as it is radioactive and does not occur in mineable quantities.
China’s dominance on Rare earth Metals:
Rare earth deposits exist in countries such as Brazil, Australia, and India, China holds nearly half of the global reserves.
China is the world’s largest producer, contributing over 60% of global pro duction in the last five years.
Beyond extraction, China dominates the value chain with around 92% of global refining capacity, according to the IEA.
Over last five years, China has been the largest exporter, supplying close to 30% of global demand.
The announcement about rare earth corridors comes at a time when China is leveraging its mining industry as a strategic bargaining chip with the U.S.
U.S. is the second largest importer of Chinese rare earths after Japan; India depends heavily on its neighbour for these materials.
India’s rare earth imports increased from $14.1 million in 2014 to $17.5 million in 2024.
Over 45% of these minerals come from China.
Rare Earth Corridors in India:
The initiative aims to promote mining, processing, research, and high-technology manufacturing of rare earth elements within India.
These elements (such as Thorium and Scandium) are critical for sectors including space research, defense, energy generation, aviation, and electric vehicle production.
State-Specific Developments:
Kerala:
According to the State government, its coastline has an abundance of rare earth elements such as thorium and scandium that are required in areas, including space research and de fence, energy generation, aviation sector, and production of electric vehicles.
It aims to become the "permanent magnet hub of the nation" by utilizing the corridor to link Vizhinjam (international seaport), Chavara (home to Kerala Minerals and Metals Ltd.), and Kochi.
The state has earmarked ₹100 crore for a Rare Earth Critical Minerals Mission to reduce dependence on imported magnets.
Odisha:
The corridor is expected to drive mineral processing and high-tech manufacturing.
It will be complemented by the operation of National Waterway-5, which will connect mineral-rich regions to ports for cost-effective transport.