Rare Earth Boom Ahead? These Indian Mining Stocks May Gain From U.S.-China Trade Clash

The rare earth crisis had sparked a global sell-off across markets after US President Donald Trump imposed an additional 100% tariff on Chinese imports, effective November 1. This came after China tightened rare earth export restrictions last week, citing national security. 

Rare earths are crucial elements used in electric vehicles (EVs), wind turbines, and defense electronics. China dominates the global rare earth market, controlling approximately 70% of mining, 90% of separation and processing, and nearly all magnet production. 

These recent moves pose significant challenges for India. Under the latest rules, Indian importers must now provide end-user certificates and official assurances that rare earth magnets and related materials will not be diverted to the U.S. or used for defense purposes. 

Reports suggest that India has moved to establish a National Critical Mineral Stockpile and looks to secure a minimum of two months’ worth of rare earth supply. It has encouraged companies to diversify sources and is focusing on rare earth mining reforms to reduce reliance on China.

How Could India Benefit?

SEBI-registered analyst Pradeep Carpenter highlighted that this rare earth trade escalation will likely disrupt global supply, increase raw material prices, and force companies to look for alternative sources, including India. 

Carpenter added that India holds 6% of global rare earth reserves and has already announced a ₹7,300 crore mission to develop domestic rare earth mining and magnet manufacturing capacity. He believes that with trade tensions rising between US and China, global buyers could start turning to India for diversification. 

Rare Earth Beneficiaries

GMDC, MOIL, Hindustan Copper, and IMFA are likely beneficiaries of India’s push into critical minerals. Additionally, Bharat Forge & other engineering firms may gain from domestic magnet and defense manufacturing opportunities. 

Carpenter also noted that IREL (India), an unlisted state-owned player, is driving India’s rare earth processing efforts.

He concluded that while the tariff and rare earth war could create some market volatility in the short term, it opens a window of opportunity for India in the medium term to become a global alternative in critical minerals, with mining and engineering PSUs being the dark horses of this trend. 

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