Rare earth elements in South Asia: closing gap
Global competition over rare earth elements (REEs) has turned minerals into instruments of geoeconomics. Neodymium, praseodymium, dysprosium and terbium are essential components of electric vehicles, wind turbines, semiconductors and weapons systems. Amid the energy transition and industrial rivalry, control over rare earth elements is no longer merely a matter of mining, but of controlling global value chains. Rare earth elements in South Asia have considerable potential, and the region has the opportunity to play a greater role. However, the gap between geological potential and the capacity for production, processing and value-added manufacturing remains wide.
Mapping South Asia’s rare earth elements
According to the United States Geological Survey (USGS) Mineral Commodity Summaries 2026, global rare earth mine production in 2025 was estimated at 390,000 tonnes of rare earth oxide (REO). China accounted for 270,000 tonnes, approximately 69%, followed by the United States with 51,000 tonnes and Australia with 29,000 tonnes. India produced approximately 2,900 tonnes, less than 1% of global production. This figure has barely changed in the USGS data series over the past several years. India is the only South Asian country listed as a significant producer.
Global Rare Earth Mine Production (2025)
Yet its resources are substantial. As of January 2026, the Atomic Minerals Directorate of the Government of India recorded 13.15m tonnes of monazite containing approximately 7.23m tonnes of REO resources, plus 1.29m tonnes of REO from three hard-rock deposits in Gujarat and Rajasthan. Monazite is distributed across Kerala, Tamil Nadu, Odisha, Andhra Pradesh and other regions. Dividing these figures by annual production would yield thousands of years. Such a calculation is misleading, because resources are not economically viable reserves ready for mining. This is where the gap between geology and industry emerges.
Pakistan, Bangladesh, Nepal, Bhutan, Sri Lanka, Afghanistan and the Maldives are not listed as commercial producers in the USGS 2026 tables. Their opportunities lie in geological mapping, exploration and resource development, rather than in production that is assumed to already exist.
Composition, atoms and buyers
Most analyses stop at asking how much mineral is available and when a factory will be built. Three important dimensions are rarely discussed.
First, composition. Monazite is generally rich in light rare earth elements such as cerium, lanthanum, neodymium and praseodymium. Heavy elements such as dysprosium and terbium, which help maintain magnet strength at high temperatures in electric-vehicle motors and defence equipment, are present in smaller concentrations. The generally light-rare-earth-dominated composition of monazite is also reflected in the official statement of India’s Ministry of Mines. A USGS study on variations in rare earth element composition in monazite also shows that the mineral’s composition can vary from one location to another. Therefore, the figure of 7.23m tonnes does not automatically meet the market’s most critical needs. The market’s vulnerability lies in heavy elements and the ability to separate them, not in total volume.
Second, atomic factors. Monazite contains thorium and uranium, so its handling is closely tied to the atomic minerals regulatory regime and dominated by state institutions. The Indian government officially categorises monazite as a mineral containing radioactive elements and places its mining and processing under government supervision. The Indian Department of Atomic Energy’s statement explains the connection between monazite, thorium and uranium. Thorium has two sides. For miners, it adds the burden of managing radioactive materials. For India, it represents a potential raw material for its long-term nuclear programme. Thus, the future of India’s rare earth industry cannot be understood merely as a commodity issue. It is connected to nuclear energy policy and national security.
Third, anchor buyers. Markets do not buy oxides, but magnets, motors and components. Magnet factories can only remain viable when electric-vehicle, turbine or defence manufacturers commit to purchasing their products. Therefore, demand-side policy is just as important as factory subsidies.
The downstream gap
The greatest challenge is building an industry capable of separating, purifying and transforming minerals into manufactured products. The chemical characteristics of individual elements are very similar, making separation dependent on hydrometallurgy, solvent extraction, energy, capital, skilled personnel and strict waste management.
India already has experience in mining, separating and refining rare earths into oxide forms through Indian Rare Earths Limited. Its government acknowledges that the midstream and downstream industries, namely metals, alloys and permanent magnets, remain limited. In November 2025, the government approved a Rs 72.8bn scheme to establish 6,000 tonnes per year of sintered permanent magnet production capacity. The scheme covers the development of an integrated production chain, from rare earth oxides to finished magnets, as explained in the official announcement of the Indian government. In March 2026, the tender process to select manufacturers for permanent magnet facilities with this capacity was announced by the Indian Ministry of Heavy Industries. The objective is to connect domestic resources with the electric-vehicle, renewable-energy, electronics and defence industries. The lesson is clear: possessing minerals does not automatically mean achieving self-sufficiency. A country can be rich in natural resources yet remain dependent on imports of high-value magnets.
Rare earth elements in South Asia: building a collective role
China not only leads in mining but also controls the largest share of rare earth processing and magnet manufacturing. A 2025 report by the Council on Energy, Environment and Water notes that China controlled more than 90% of global rare earth and graphite processing capacity in 2024. When supply chains depend on a single country, export restrictions or geopolitical tensions can quickly ripple through global industries. The United States, Australia, Japan and the European Union are diversifying supplies through investment and technological partnerships.
From the perspective of economic statecraft, minerals are instruments of national bargaining power. The theory of global value chains adds that the greatest profits go to those who control technology, refining, components and market access, rather than those who merely extract raw materials. Therefore, South Asia must not stop at exploration.
India can become a technological hub for separation and refining. Other countries can strengthen geological mapping, geological education, materials research and industrial cooperation according to their respective capacities. Three foundations are essential. First, a transparent, standardised regional geological database that enables investors to distinguish between potential resources, measured resources, and economically viable reserves. Second, research consortia and shared processing facilities to reduce costs and accelerate technology transfer. Third, harmonised environmental standards, radiation safety regulations and mining governance, given the presence of thorium and uranium in monazite.
Ultimately, South Asia’s path on the global minerals map will not be determined by how much rare earth lies beneath its soil, but by its ability to turn those resources into production capacity, technological strength, and geopolitical bargaining power. Without value-chain integration, the region risks remaining a spectator. Through regional cooperation, technological investment, and measurable downstream development, it can move from potential supplier to an important node in the global minerals industry.
Eko Setiobudi, SE, ME, is an economist, lecturer at STIES Mitra Karya Bekasi, Indonesia, and business practitioner. His areas of interest include macroeconomics, fiscal policy, financial markets, economic development, international trade, and Indonesia’s role in the global economy. He writes commentary and analysis on Indonesia, ASEAN, Asia, and global economic affairs.
