Cyclone Delays India Rare Earth Facility as China Limits Exports

Phailin, the most powerful cyclone to hit India in 14 years, has delayed a plan to start production of rare earth elements to help boost supplies after China limited exports.

The commissioning of Indian Rare Earths Ltd.’s 5,000 metric ton oxide unit in the eastern state of Odisha has been pushed back by at least four months to February after Cyclone Phailin damaged the factory and its surrounding areas, Chairman and Managing Director R.N. Patra said in an interview. The new unit is about 10 kilometers (6.2 miles) from Gopalpur where the storm made landfall on Oct. 12.

India is seeking to boost its own rare earths supply after China, the supplier of over 90 percent of the world’s requirement, imposed export quotas beginning 2007 to conserve resources and protect the environment. The delay will affect customers such as Japan’s Toyota Tshusho Corp. (8015), a part of the Toyota Group, which will buy half of Indian Rare Earths’ produce from the monazite ore it plans to mine at the site.

“India’s dependence on rare earths will increase as the focus on renewable energy sources of power rise and as higher income drives demand for high-tech flat televisions and phones,” Patra said. “Supplies to Toyota Tsusho, which is part of a government-to-government agreement, can start as soon as we start production.”

The U.S., European Union and Japan complained in March last year to the World Trade Organization about China’s limits on shipments of rare earths, a group of 17 chemically similar elements also used in color television panels, defense equipment, wind turbines and hybrid cars.

To contact the reporter on this story: Abhishek Shanker in Mumbai at ashanker1@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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