Indian Rare Earths, which has bagged permission to mine rare earths in the coastal stretch, has taken a lease and is looking to mine around 2,500 hectares.
The Atomic Minerals Directorate for Exploration and Research, Hyderabad, a constituent unit under India's Department of Atomic Energy, had conducted a survey and found huge deposits of rare earths minerals in the coastal stretch of Puri.
Indian Rare Earths has been mining and separating heavy minerals like ilmenite, rutile, zircon, silimanite, garnet and monazite from beach sands which are high in demand domestically as well as for exports. These minerals are used in the manufacture of white pigment, ceramics, polishing glass and TV tubes.
There is another 12,000 ton Monazite processing plant near Vizag, the second largest city in Andhra Pradesh, and a major sea port, which is being set up with Toyota's help. The area is expected to yield high purity RE oxides, including Neodymium, which is used in permanent magnets.
"The Odisha plant could be commissioned by December. We will carry out dry runs, and hopefully, start production early next year,'' said R N Patra, chairman, Indian Rare Earths Limited.
Set up at an investment of $25 million (Rs 1.4 billion), around 2,250 tons of RE will be separated at Indian Rare Earth's Aluva facility in Kerala for domestic consumption, while the rest will be exported.
Patra added that from a standing start, India would be able to achieve 4% of global production.
The company has managed to mine around 35% of the leased area so far of the 2,400 hectares that has been taken on lease, and separated the heavy minerals from the sand.
China, the world's largest rare earth exporter, reduced its export quotas for the minerals. Though China commands a 97% global monopoly on various stages of rare earth production, US Geological Survey estimates that China has half of the world's reserves at 55 million tons.
Though India is unlikely to be able to catch up with China's rare earth export volume, the new plant in Odisha is expected to produce 11,000 metric tons of rare earth materials a year.
India is planning to increase its output three fold by 2017. Given the dangers of Chinese monopoly, countries like India, Japan and Vietnam have already started collaborating in REEs, with the expectation that more than 15% of rare earth minerals could be mined outside of China by the end of this decade.
Vietnam is known to have significant rare earth reserves and by collaborating with Japan, is expected to make significant inroads in this field. India has regularly attributed RE reserve figures of 2-3%. Latest Indian government statistics, however, show India may well have 9% of global RE reserves at 10.7 million tons.
The stranglehold by China upset many producers in India. As Indian Rare Earths Patra said, "We were producing oxide of RE Cerium at a price of $10.83 (Rs 600) per kilo. China was providing the same for $1.5 per kilo.''
Cheap rare earth from China also forced closure at the world's largest rare earth mine Mountain Pass, in California, he added.
Patra said though in 2007, the company had pointed out the urgency to restart RE production to the Indian government, it was denied permission since the Thorium from Monazite was the only interesting aspect at that time.
Today, the Indian government is making a concerted effort to identify potential RE reserves in India. The country is also exploring joint development of REs with Japan and other nations.