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Kolkata: With a strategic intent to be free from China's global dominance of rare earth permanent magnets, the Central government has taken up a plan to manufacture these vital things in the country. It has decided to allocate Rs 7,300 crore to set up a manufacturing base inside the country and five units will be set up to meet the demand of these items which are required in industries such as automobiles, wind turbines, medical imaging and advanced defense systems.
According to the plan, while the total expenditure will be Rs 7,300 crore, capital expenditure will be as high as Rs 6,500 crore and the operational expenditure has been pegged at Rs 800 crore. The plan envisages production of 6,000 tons of rare earth permanent magnets a year. Analysts have indicated that once this plan is implemented it could impact the following four stocks positively.
Hindustan Zinc is a part of Anil Agarwal-led Vedanta Group. It is the country's largest producer of zinc. The company is now expanding into new ventures such as mining and processing of rare earth minerals. The company is focusing on neodymium, which is a crucial component of magnets that are required for electric vehicles and renewable energy systems. These two are the focus areas of the government as it moves to meet its global obligation to become a net zero emission country by 2070.
The Centre recently conducted an auction for critical minerals and Hindustan Zinc secured a rare earth block, which has monzonite deposit of the non-radioactive monzonite variety. Anil Agarwal's company has drawn up a plan to collaborate with industry experts from Australia, South Africa, Chile and China to improve mining skills with the help of AI and drones.
The Hindustan Zinc stock was trading at Rs 494.75 on October 10. Its 1-year return is (-)2.76% and 5-year return is 137.18%.
The competence of Gujarat Mineral Development Corporation lies in coal and bauxite mining but it is now entering the rare earth minerals sector and plans to set up a full chain from mining to processing and manufacturing. It is currently developing one of the world's largest rare earth deposits at Ambadungar in Gujarat. The plan is to mine neodymium, praseodymium, lanthanum, and cerium from this site. These elements find a lot of use in electric vehicles, glass, magnets and optical equipment.
The Gujarat Mineral Development Corporation stock was trading at Rs 618.30 on October 10. it generated returns of 89.43% in the past one year and 1,277.06% in the past five years.
National Aluminum Company Limited, popularly referred to as NALCO, has been an aluminum producer traditionally. Sensing opportunity in the rare earth minerals, the company is making a foray into the new sector and a lot of its activities lie beyond the borders of India. It has acquired five lithium mines in Argentina with active collaboration from Khanij Bidesh India. It will also participate in auction of critical mineral blocks in the country. It also has plans to enter lithium refining in Australia. NALCO is also focussing on gallium -- a critical mineral. The plan is to produce it by 2027 and experts say the company might turn out to be the country's only producer of gallium.
On October 10, NALCO share was trading at Rs 224.30. The one-year and five-year return of the stock are 5.44% and 615.18% respectively.
Sona Comstar is a company that has special competence in manufacturing drivetrain components like precision gears and traction motors for EVs. It also manufactures components for drones, Electric Vertical Take-Off and Landing aircraft, automated guided vehicles and Autonomous Mobile Robots. It also supplies gears and motors to Elon Musk's Tesla. The company imports a lot of rare earth magnets in India, particularly from China. This background has prompted it to make a backward integration move into production of magnets in India.
(Disclaimer: This article is only meant to provide information. TV9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds, precious metals, commodity, REITs, INVITs, any form of alternative investment instruments and crypto assets.)
