Rare earth magnet supplies for certain applications may taper off by mid July: Report

New Delhi, Jun 12 (PTI) Inventories of rare earth magnets may taper off by mid-July for certain automotive applications, following the export restrictions from China and ensuing shipment delays, rating agency Icra said on Thursday.

While the automobile industry is exploring a range of contingency options, each of these appears ridden with logistical, regulatory, and engineering complexities, exacerbating the prevailing uncertainty, it stated.

The industry, having recovered from the semiconductor supply crunch of 2021-22 that shaved off nearly 100,000 units, or about 4 per cent, from passenger vehicle production, now faces a fresh disruption, Icra Senior Vice President and Group Head-Corporate Ratings Jitin Makkar said in a statement.

"With China tightening export controls and delaying shipment clearances, rare earth magnet inventories are projected to last only until mid-July 2025 for several, if not all, passenger vehicle and two-wheeler applications," he added.

The magnets in question — neodymium-iron-boron (NdFeB) — are known for their strength and efficiency, used for high-performance automotive applications such as traction motors in electric vehicles (two-wheelers and passenger vehicles) and power steering motors (in passenger vehicles) in both electric vehicles and internal combustion engine vehicles.

The more conventional ferrite magnets are used for less performance-sensitive applications such as wiper motors, window regulators, and starter motors.

"In FY2025, India imported around USD 200 million worth of these magnets for both automotive and non-automotive applications, with approximately 85 per cent of this sourced from China," Makkar said.

The supply uncertainty has cast a shadow on production planning, and the dependence on China for these specialised materials could upend the automobile sector, particularly the fast-growing electric vehicle segment, if the concern remains unresolved, he added.

To mitigate the risk, Indian auto component manufacturers, OEMs (original equipment manufacturers) are exploring a range of options, including importing fully assembled motors from China.

These workarounds, however, come with logistical, regulatory, and engineering complexities. Implementing some of the above alternatives would also involve accelerating the development, testing, and validation cycles to minimise production disruptions, Icra noted. PTI MSS MSS SHW