India's private sector has made a significant stride in securing critical mineral and rare earth supply chains with Hyderabad-based Midwest Ltd signing a landmark deal with Indonesia's state-run PERMINAS, aiming to enhance domestic manufacturing and reduce economic vulnerabilities.
Key Points
- Midwest Ltd, an Indian private company, has partnered with Indonesia's PERMINAS to secure critical mineral and rare earth resources, marking a significant step in India's private sector involvement in overseas mining.
- The collaboration aims to produce 5,000 tonnes of oxide, leading to 20,000 tonnes of magnets from Indonesian assets within four years, with an estimated consortium-level value of $750 million for the oxide output.
- The MoU, signed during Prime Minister Narendra Modi's visit to Indonesia, underscores the importance of strengthening collaboration in critical minerals and rare earths to build diversified and resilient supply chains.
- Midwest Energy is set to begin manufacturing rare earth magnets in Hyderabad, complementing the upstream efforts in Indonesia and contributing to India's downstream value addition.
- The deal is particularly crucial for securing heavy rare earths, which are vital for defence and other key sectors, addressing India's current reliance on light rare earth resources.
In a move to secure long-term critical minerals and rare earth supply chains, India has now brought in private sector players to tap overseas resources.
Hyderabad-based Midwest Ltd became the first private company in India to secure mines abroad by sealing a deal with Indonesia's state-run PT Perusahaan Mineral Nasional (PERMINAS).
A memorandum of understanding (MoU) was signed on Tuesday between both the companies, along with Midwest Energy Ltd and Non-Ferrous Materials Technology Development Centre (NFTDC).
The deal was signed coinciding with Prime Minister Narendra Modi's visit to Indonesia.
This comes at a time when Midwest Energy is expected to start manufacturing rare earth magnets by next quarter at its 500-tonne-per-annum facility in Hyderabad.
Strategic Partnership for Critical Minerals
The companies are targeting to produce 5,000 tonnes of oxide that can create 20,000 tonnes of magnets from the Indonesian assets in the next four years, said Ram Kollareddy, chief executive officer (CEO), Midwest Ltd.
According to a statement by the Ministry of External Affairs (MEA), both Modi and Indonesian President Prabowo Subianto underscored the importance of further strengthening collaboration in critical minerals and rare earths with a focus on building diversified and resilient supply chains essential for the growth of domestic manufacturing industries towards reducing vulnerabilities and strengthening economic security.
The leaders commended the growing collaboration between the two countries on rare earths and welcomed the signing of the MoU between NFTDC, Midwest Ltd, and PERMINAS, it said.
"This is the first time a private company will be getting into rare earth assets abroad.
"We are looking at a possible production of 5,000 tonnes of oxides in the next four years.
"This will help both countries achieve a considerable volume of critical supply chains," Kollareddy said.
At the consortium level, the expected oxide output may be valued at around $750 million.
Collaborative Expertise and Value Chain Development
"We will contribute exploration, mine planning, environmental studies, mining and mineral processing operations, and the extraction and separation of rare earth elements, apart from downstream value addition through the manufacturing of permanent magnets in collaboration with Midwest Energy and NFTDC," he said.
Under the MoU, Midwest Ltd, Midwest Energy Ltd, and NFTDC will collaborate as a consortium, contributing complementary areas of expertise.
Midwest Ltd will contribute expertise in exploration, mine planning, environmental studies, mining and mineral processing operations, and the extraction and separation of rare earth elements, while Midwest Energy will provide technology and operational expertise in establishing a rare earth magnet manufacturing plant.
NFTDC will provide technology, technical expertise, and services across the value chain.
PERMINAS will provide access to critical minerals and rare earth resources for joint development in Indonesia.
Expanding India's Global Footprint
So far, only public sector companies like IREL (India), Khanij Bidesh India Ltd (Kabil), NMDC Ltd, Coal India Ltd, and ONGC have looked for rare earth assets abroad.
There are light rare earths and heavy rare earths in use.
India has enough light rare earth resources.
Light rare earths are used for basic applications like two-wheeler and three-wheeler motors and bonded magnets for electronics.
On the other hand, heavy rare earths are used in defence and other key sectors.
The MoU is considered a move to ensure a steady supply of heavy rare earths.
This MoU establishes a framework for the parties to evaluate potential collaboration across the rare earth value chain in Indonesia, including upstream exploration and resource assessment, mining, processing, extraction, refining, and downstream manufacturing in general and rare earth magnet production in particular.
This further opens up opportunities in related areas.
This milestone reinforces Midwest Ltd's ongoing strategy to build a meaningful presence across the rare earth value chain, complementing its existing initiatives in the sector.
It marks its first structured collaboration with a Southeast Asian state-owned strategic minerals enterprise.
Under the terms of this MoU, the parties shall establish a joint working group to plan and monitor the project's implementation, a statement said.
NFTDC is an autonomous, self-financing research and development (R&D) institution operating under the aegis of the Ministry of Mines, Government of India, specialising in non-ferrous materials technology.
