SERGEY SUKHANKIN
The world is becoming increasingly hungry for rare earth elements (REEs) and rare metals (RMs). Of particular importance are uranium, lithium, tantalum, and a range of other chemical elements.
Two main forces are driving demand. The first is economic need. With a global goal of net zero emissions and a growing reliance on artificial intelligence, the world’s appetite for green energy and the technologies to generate, store and use it are increasing. As projected by the International Energy Agency, the rising adoption of clean energy technologies is expected to quadruple the demand for REEs and RMs by 2040.
The second driver is lack of supply. There is a reason they are called rare earth elements. In the West, the scarcity of resources is coupled with anxiety surrounding the environmental hazards associated with mining and processing strategic minerals. At the same time, heavily sanctioned Russia and increasingly anti-Western China are adopting restrictions on exports of strategic commodities including REEs and RMs. In turn, Sub-Saharan Africa is plagued by (geo)political instability and violence that drastically reduces its export potential. Thus, a combination of factors makes Central Asia – particularly resource-endowed Kazakhstan but also Uzbekistan and Tajikistan – the most viable alternative to traditional suppliers.
Central Asian leaders understand that without foreign (financial) capital, know-how and technologies, capitalisation on local resource potential is not realistic.
The European Union and the United States form a powerful camp, with both interested in tapping Central Asia’s vast potential in critical minerals. Along with the United Kingdom, they have articulated their strategic interest in the region. Recent intra-regional development and the changing attitudes of Central Asian countries towards their mineral wealth will be of benefit in this regard. Unlike in the West, Central Asian governments are enthusiastic about the prospect of turning their vast deposits of REEs and RMs into a new source of revenue for the local economies. Kazakhstan President Kassym-Jomart Tokayev went as far as to call these commodities the “new oil”.
Yet Central Asian leaders understand that without foreign (financial) capital, know-how and technologies, capitalisation on local resource potential is not realistic. And despite some disagreements over trade routes, they have also realised that collaborative actions will better enable them to excel in producing REEs and RMs, thus securing their place in the global supply chain.
The problem lies in the fact that other powerful actors with competitive advantages perceive Central Asia as a zone of their own privileged interests. By virtue of history, geography, and regional and cultural particularities and dependencies, Central Asian countries are bound with Russia and China.
China, the undisputed global leader in both reserves and production of REEs and RMs, has banned the export of extraction and separation technologies for rare earths – a step that cements their global dominance in the sector. Yet, according to Central Asian experts, compared with 2010, China’s share in the global supply and production of REEs and RMs has decreased. Furthermore, China’s own growing internal demand for critical minerals – primarily associated with the rapidly increasing production of microchips and green energy – makes its strategic interest in this sector of Central Asian economies particularly strong. In effect, Beijing has already taken the lead, especially in Kyrgyzstan and Tajikistan, where it controls almost all the leases of rare-earth mining.
Western countries may need to think twice about committing to expensive and (geo)politically risky projects in the region.
Russia, in its determination to preserve its presence in Central Asia, is chiefly concerned with Kazakhstan’s uranium. Despite being the world’s leading uranium producer, Kazakhstan is strategically dependent on Russia for both transportation and processing of the rare element, which in turn makes Russia the key player in the uranium and nuclear-related fields. France, too, has a growing interest in Kazakhstan’s uranium deposits – given ongoing destabilisation in Niger, one of France’s key suppliers of this commodity, Paris is looking to diversify its supply chain. And with decisive steps by the United States aimed at reducing its dependency on Russia, Moscow likely feels that its global leadership in the nuclear domain is being threatened.
Heavily indebted to China and facing potential repercussions from Russia, Central Asian countries face economic and security challenges that could impede their ability to become trusted suppliers of critical minerals to Europe and the United States. In addition, given Central Asia’s firm preference for authoritarian-style governance, Western countries may need to think twice about committing to expensive and (geo)politically risky projects in the region. Perhaps diversification of supply with prioritisation of countries such as Australia, Argentina and Canada would be the most prudent move.
source : lowyinstitute