According to Reuters, Sona Comstar, India’s largest importer of rare earth magnets, plans to produce it locallyElectric vehiclekey components in response to the Indian government’s policy of promoting local production while responding to China’s restrictions on rare earth magnet exports.
Image credit: Sona Comstar
As a producer of about 90% of the world’s rare earth magnets, China imposed restrictions on rare earth magnet exports in April this year in response to US tariff policies. Although China and the United States signed an agreement to speed up the approval of rare earth exports this month, governments and companies around the world are still actively looking for alternatives.
India, the world’s third-largest automotive market and has the fifth-largest rare earth reserves, is currently developing new plans to incentivize local rare earth magnet production to reduce dependence on China.
Sona Comstar is the first company in India to announce its intention to produce rare earth magnets locally after the government’s plans were made public. Sona Comstar CEO Vivek Vikram Singh said in an interview with Reuters: “As the largest importer of rare earth magnets, we are the most affected company in India. We must consider India’s self-sufficiency in rare earth magnets and are working with the Indian government to advance this. ”
Vivek Vikram Singh said Sona Comstar will decide to invest in indigenous manufacturing based on the finalization of India’s incentive policy and other factors. He mentioned that the company has enough funds for local manufacturing, and its revenue has quadrupled in the past five years, exceeding $400 million.
Any rare earth mining and processing program takes years to implement, so India’s dependence on Chinese rare earth magnets cannot be solved immediately. It is reported that Sona Comstar supplies gears and motors to automakers such as Tesla and Stellantis, and imported 120 metric tons of rare earth magnets from China in the last fiscal year. Vivek Vikram Singh pointed out that Sona Comstar plans to import 200 tons of magnets this year to meet the growing demand from its electric vehicle customers, which account for about one-third of its revenue.
Currently, the US market accounts for about 40% of Sona Comstar’s revenue, ahead of India and Europe. However, with the recent acquisition of Escorts Kubota’s Indian Railways business, Sona Comstar’s business has diversified beyond the automotive industry, and most of its revenue is expected to come from India this year. For future growth, Sona Comstar is looking to acquire more customers in China, Japan, and South Korea.
However, the aforementioned growth plan came at a time when Sona Comstar’s chairman Sunjay Kapur died suddenly in June, raising concerns about the company’s future direction and causing the company’s stock price to fall.
Sona Comstar has now appointed Jeffrey Mark Overly as its new chairman. In response, Vivek Vikram Singh said that this will not change the direction of Sona Comstar because the company is run by a professional management team and has the “management reserve” needed to overcome crises and disruptions.
