Shares of Gujarat Mineral Development Corporation (GMDC), engaged in mining and extraction of various minerals and metals, extend their winning run to the third day in a row, gaining 8.4% to ₹569.80 apiece.
The rally followed the Union Cabinet’s approval on Wednesday of a ₹7,280 crore incentive program for rare earth magnets, intensifying the country’s push to build domestic capacity and reduce dependence on China.
The program aims to address the shortage of magnets and create a capacity of 6,000 metric tons per annum, India’s Technology Minister Ashwini Vaishnaw said in a cabinet briefing in New Delhi.
Rare earth deposits, called ‘placer deposits,’ are found along beaches, and India is among the top three countries for such deposits, Vaishnaw added. “India has 6.9 million tonnes of rare earth deposits.”
The program will run for seven years and focus on creating integrated manufacturing facilities. India plans to set up five units of 1,200 tons per annum capacity within three years.
India is among a growing number of countries racing to capture a greater share of the rare earth magnet supply chain after China, which processes about 90% of global output, tightened exports in April. The restrictions, issued during Beijing’s trade dispute with the US, curtailed access for automakers worldwide.
Union Heavy Industries and Steel Minister H.D. Kumaraswamy clarified that the scheme would provide ₹750 crore to five selected participants as a capital subsidy. The government would also provide ₹6,450 crore as a sales-linked incentive for these magnet makers over a five-year period after the manufacturing units are set up.
Both public and private sector companies will be eligible to participate. Companies from electronics, automobiles, and steel have shown interest. “The companies that will receive incentives will be decided transparently, and they will decide where they would set up manufacturing plants,” he said.
GMDC shares deliver 150% return since February
The company’s shares have been on an upward run since February, delivering a multibagger return of 150%, and the rally has also led to a record high of ₹651 apiece. Though the short-term performance looks impressive, the stock’s long-term trend looks even brighter, having gained 300% over three years and 1,100% in the last five years.
GMDC is India’s second-largest lignite-producing company and top merchant seller of lignite. It is a State Public Undertaking of the Government of Gujarat.
The company is engaged in mining lignite from deposit-rich areas across the state, the company markets it to various high-growth industries, including textiles, chemicals, ceramics, bricks, and captive power.
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