India, Japan hope to revive earlier agreement to trade in rare earth minerals

MUMBAI: Pricing of rare earth oxides remains a sticky point between India and Japan as the two countries try to revive an earlier agreement to trade in rare earth minerals in an effort to counter China's global monopoly, sources familiar with the matter told ET.
Apart from differences on pricing, the Indian government is pushing Japan to transfer technology and set up industries in India to use these minerals. Both the countries hope to iron out pricing and other glitches after Prime Minister Narendra Modi's visit to Japan this week.

Once successful, India Rare Earths Ltd (IREL) will start exporting about 2,500 tonnes of rare earth oxide processed at its soon-to-be commissioned Odisha Sand Complex to Toyota Tsusho's plant in Vizag, according to the new negotiations.

Rare earth minerals are used in high tech applications like lasers used in defence network, radar products used in space surveillance and missile navigation, magnets used in aircraft control, batteries used in automobile sector and fuel cells used in the energy sector.

Even though the first Memorandum of Understanding signed in 2012 looked at an export 4100 tonnes rare earth to Japan, no trade was taken place yet. This is because India Rare Earths Ltd's (IREL) processing plant, which was going to supply to Japan's Toyota Tsusho plant in Andhra Pradesh, was delayed due to certain clearances, driving up the cost of production.

Since then Toyota Tsusho is not in favour of buying rare earth oxides at prices higher than envisaged earlier. Negotiations between both these countries haven't borne any fruit yet.

Japan was ready to pay higher prices for rare earth for a year but IREL did not get back on the offer, according to a senior official with the Japanese government, who declined to be named.

"We are saying that even if prices are high, the contract term should be shorter. Both companies must make concessions to each other," said official.