Policy Update
Sivapriya
Background
India has the third-largest reserves of rare earth elements, accounting for 6.9 million metric tons or 7.6 percent of global reserves. But it contributes less than 1 percent of the global rare-earth mining, facing infrastructural, environmental, and regulatory challenges. IREL has attempted to address some of these challenges and is working to position India as a significant player in the global rare-earth elements market.
IREL (India) Limited, formerly known as Indian Rare Earths Limited, was formed on August 18, 1950, with its first Rare Earths Division (RED) at Aluva, Kerala. It became a complete Government of India Undertaking under the aegis of the Department of Atomic Energy (DAE) in 1963. The company operates with the vision of becoming a significant contributor to the global clean energy mission by providing high-quality performance-enhancing materials and operating in a socially responsible manner. Over the years, IREL has been growing steadily, and as of a 2018 report, it has been generating profits continuously for at least 12 years. It was recognized as a profit-making Central Public Sector Undertaking (CPSE) since FY 1997-98.
Objectives
- To explore, mine, process, and commercialize rare earths and minerals essential for India’s energy, defence, and electronics sectors.
- To emerge as a leading supplier of beach sand minerals in the world by maximizing existing capacities, adding new capacities, and capturing a major portion of the global TiO² (raw minerals for titanium dioxide production) feedstock demand.
- To facilitate value-chain industries in Rare Earths and Titanium, and increase self-reliance and reduce import dependence.
Functioning
IREL is primarily involved in the mining of beach sands, as well as the separation, processing, and extraction of rare earths and atomic minerals. Currently, IREL operates three major plants in coastal areas – Chavara (Kerala), Manavalakurichi (Tamil Nadu), and Orissa Sands Complex (OSCOM – Odisha). These plants are approximately responsible for the separation and marketing of 510 thousand tonnes of ilmenite per annum, along with other heavy minerals.
Additionally, there is a Rare Earths Plant at Aluva, Kerala, which processes monazite to produce rare earths chloride, trisodium phosphate, and thorium oxalate. Now it also processes mixed rare earth chlorides and refines high-purity individual rare earth compounds of lanthanum and cerium.
A Rare Earth Permanent Magnet Plant (REPM), located in Visakhapatnam, produces samarium-cobalt permanent magnets with an annual capacity of 3000 kg.
Performance
- The company achieved a sales turnover of Rs. 1462.05 crores in 2021-22, showing a 53.3% increase over the previous year, and the Profit Before Tax (PBT) was at Rs. 7000 crores, representing a 68.6% increase over the previous year in FY 2021-22. The total income for 2021-22 was Rs. 1536.30 crores.
- Foreign exchange earnings amounted to Rs. 27382 lakhs in 2017-18, and the exports increased to Rs 962 crores in 2023-24. Main exporters include countries like the USA, UK, France, Germany, Norway, and Japan.
- IREL suspended a 13-year-old rare earth supply agreement to Japan to prioritise India’s domestic requirements, reduce foreign dependence for processing chains, and facilitate the move towards self-reliance.
- Based on IREL’s performance, the union budget in 2024-25 eliminated duties for most critical minerals and reduced Basic Customs Duties (BCD) on others. The 2025-26 Union Budget exempted cobalt powder, lithium-ion battery scrap, and scrap of some critical minerals to support domestic processing.
- IREL is currently in the process of developing a Rare Earth and Titanium Theme Park in Bhopal, Madhya Pradesh. It will include a pilot plant based on laboratory-scale technologies developed by BARC to encourage participation of budding entrepreneurs and startups. There will be mini-plants to demonstrate the production of metals like lanthanum, cerium, and neodymium for the recovery of rare earths from end-of-life magnets, LED, and lamp phosphors.
- IREL has established a number of Joint Venture enterprises to facilitate the growth of rare earth production and extraction within the country. IREL IDCOL Limited, with IDCOL (an Odisha State Undertaking), is a greenfield project in heavy mineral production in Odisha. Another JV with TAMIN (Tamin Nadu Minerals Limited) is focused on mining and separation activities. IREL has also established a JV with UKTMP JSC, Kazakhstan, to set up a Titanium Slag Plant in Odisha.
Challenges
- Production constraints: IREL could not maximise returns in the past because of the non-issuance of transport permits by the Tamil Nadu Government authorities, from the lack of clarity on the Coastal Regulation Zone (CRZ) notification and environmental clearance. Likewise, the Chavara unit in Kerala faced a raw material constraint due to lower collection of raw sand, due to increased demands of landowners for surface rights, employment, and immediate return for rehabilitated land.
- Underutilisation and suboptimal plant operation: There is an ongoing challenge of underutilisation of plant capacity and suboptimal plant operations across various units. These issues may arise from the unavailability of good-quality raw sand to meet the plant’s capacity, such as in the Manavalakurichi plant, low grades in beach washings, and increasing collection costs each year.
- Limited domestic market for early value chain products: Despite government efforts to promote clean energy and electric vehicles, the market for products at the beginning of the rare earth value chain in India remains limited. This is likely due to a gap between the push for advanced technologies that use rare earths and the current state of domestic processing and consumption of early-stage rare earth materials.
- Regulatory and policy issues: IREL faces increasing expectations from landowners, making land acquisition difficult. There is also the problem of obtaining environmental and CRZ clearances for new and existing mining leases and extending them.
- Reduced heavy mineral content: There are no alternate sources to compensate for the reduction in heavy mineral content of beach washings in Kerala and Tamil Nadu, leading to low capacity utilization.
- Institutional hurdles: IREL works with an ageing workforce and a legacy-oriented HR policy from the takeover of Chavara and Manavalakurichi plants. An independent project planning and evaluation cell is absent and has faced only limited success in the value addition initiatives in the past.
Way Forward
- Increasing production and capacity utilization: IREL is constantly making efforts to augment production at Chavara and Manavalakurichi plants and increase production of OSCOMS’s Rare Earth Plant towards better capacity utilization.
- Domestic market development: The company is focusing on the growing demand for rare earths in India, particularly in magnets for electric vehicles, clean and green energy, and automation.
- Canalisation of exports: The Government of India has appointed IREL as a State Trading Enterprise for the canalisation of beach sand mineral exports, requiring IREL to expand and create a separate vertical.
- Diversification into critical minerals: IREL is collaborating with Oil India Limited to develop critical minerals and expand its areas of business in strategic mineral sourcing.
- Organizational development: IREL needs to diversify its workforce and adopt an HR policy that includes initiatives like talent management, succession planning, internship schemes, performance appraisal reviews, skill development centres, etc.
- Environmental responsibility: IREL works in an area that causes numerous damages and losses to the environment. It should work on developing a separate vertical to tackle the damages and compensate for the damages caused. These initiatives should go beyond planting saplings in mining units and measure progress over time to restore the environment.
IREL, as a company, has contributed significantly to India’s growth in the global rare earths market. Despite the challenges it faces, it has great potential in pushing India towards self-reliance with continued efforts in development in its existing and future units.
References
- Annual Report 2017-18. (2017). https://www.irel.co.in/documents/20126/853325/AR17-18.pdf/ce101e34-7797-131f-2efa-7f3e9c9e2462?t=1735304250527
- Domestic Exploration and Policy on Rare Earth Minerals. (n.d.). https://sansad.in/getFile/annex/268/AU1699_9nIOZ6.pdf?source=pqars
- Environment – IREL (India) Limited. (2025). Irel.co.in. https://www.irel.co.in/environment
- Home – IREL (India) Limited. (n.d.). Www.irel.co.in. https://www.irel.co.in/
- OIL and IREL MoU to Collaborate on Rare Earth and Critical Minerals. (n.d.). Retrieved August 31, 2025, from https://www.oil-india.com/files/investor_services_documents/Regulation_30_Press_Release_07_08_2025.pdf
- The Particulars of Organisation, Functions and Duties. (n.d.). Retrieved August 31, 2025, from https://irel.co.in/documents/20126/115214/rt1.pdf/616419f4-f5f3-377f-19da-4b58c03adcbe?t=1573038549177
Acknowledgement: The author sincerely thanks Aasthaba Jadeja and other IMPRI fellows for their valuable contribution.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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