Government prioritises rare earth magnet supply amid China curbs; GMDC seen as key domestic player in critical mineral space

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Rare Earth Shortage Threatens EV and Electronics Supply Chains Strategic Minerals in Focus; GMDC, NMDC, Vedanta Seen as Key Beneficiaries Trading View & Key Stocks to Watch

Shares of Gujarat Mineral Development Corporation (GMDC) surged over 10% intraday on July 18, following reports that the Prime Minister’s Office (PMO) is likely to hold a high-level stakeholder meeting on the escalating rare earth magnet crisis. According to CNBC-TV18, the meeting is expected to take place this afternoon, with a focus on strategic responses to China’s informal restrictions on rare earth exports.

Though GMDC has not officially disclosed its rare earth plans, the company earlier confirmed it is actively working towards entry into the critical minerals space, calling rare earths a future value driver. In May, GMDC allocated a capex of ₹3,000–4,000 crore for critical mineral development, without detailing specific projects. This renewed government focus has elevated investor expectations that GMDC could play a pivotal role in India’s rare earth value chain.

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Rare Earth Shortage Threatens EV and Electronics Supply Chains

The urgency stems from mounting industry pressure. Indian automakers and electronics exporters have raised red flags over informal Chinese sanctions on rare earth magnets and processing equipment, citing serious risks to production. Rare earth magnets, used extensively in electric vehicles (EVs), wind turbines, and smartphones, are crucial for India’s manufacturing ambitions.

Multiple reports indicate that the Ministry of Heavy Industries is working on a subsidy scheme worth ₹1,345 crore to promote domestic production of rare earth magnets. It proposes financial incentives for at least two domestic manufacturers, though the number may expand depending on capacity and approvals. Meanwhile, the Centre is also considering relaxing localisation rules to temporarily allow the import of fully assembled electric motors, easing supply disruptions for automakers.

Strategic Minerals in Focus; GMDC, NMDC, Vedanta Seen as Key Beneficiaries

The Centre has already auctioned four blocks of strategic minerals this year, with one block specifically focused on rare earth elements (REEs). While GMDC is emerging as a frontrunner, other listed PSUs including NMDC, Coal India, Hindustan Zinc, MOIL, and Vedanta are seen as likely beneficiaries of India’s broader critical minerals strategy.

National Security Advisor Ajit Doval and Chinese Foreign Minister Wang Yi discussed bilateral issues, including rare earth trade, during a June SCO meet. Separately, Commerce Secretary Sunil Barthwal confirmed that India is actively engaging with Beijing to resolve supply constraints.

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Trading View & Key Stocks to Watch

GMDC shares broke past the ₹320 resistance level, surging on strong volume and speculative interest. Technical indicators show bullish momentum with next resistance near ₹340. A sustained move above this zone could attract further institutional buying.