Highlights

• A 2025 study analyzes Iran's push to build domestic rare earth and lithium industries as part of its 'resistance economy' doctrine, linking critical minerals to energy sovereignty and survival under sanctions.
• Despite pilot-scale successes, Iran faces two structural barriers:
  • China's monopoly over processing capacity
  • U.S. sanctions that restrict access to equipment, capital, and technology needed for industrial scaling
• The research reveals a strategic paradox—Iran may need Chinese investment and expertise to scale its critical minerals sector, potentially trading import dependency for Chinese control over its value chain.

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A 2025 study (opens in a new tab) by Ilya D. Baskakov (opens in a new tab), junior research fellow at the Institute of Scientific Information for Social Sciences of the Russian Academy of Sciences (INION RAN), argues that Iran’s push to build rare earth metals and lithium industries is becoming a core national-security project—tied to energy sovereignty, high-tech development, and survival under sanctions. Published in Outlines of Global Transformations: Politics, Economics, Law (Vol. 18, No. 3), the paper traces Iran’s early exploration and pilot-scale efforts, then tests a hard reality: China’s dominance over rare earth processing and the continued impact of U.S. sanctions may determine whether Iran’s ambitions become a real industrial base or remain a strategic aspiration.

Why This Matters, in Plain English

Rare earths and lithium are not abstract “mining” stories. They are key inputs for modern life: electric motors, wind turbines, electronics, batteries, aerospace components, and advanced defense systems. But “having the rocks” is not enough. The strategic bottleneck is processing—turning ore or concentrates into usable oxides, metals, alloys, and eventually magnets and battery chemicals.

Baskakov’s study highlights a core constraint shaping Iran’s options: China has built a dominant position in global rare earth supply chains—especially processing—making most countries dependent on Chinese capacity even when minerals are mined elsewhere. Iran’s development path, the author argues, is further complicated by sanctions that restrict financing, equipment, and technology imports.

Study Methods: What Baskakov Did

This is a qualitative political-economy study. Baskakov synthesizes Iranian policy concepts (“resistance economy”), trade statistics, public reporting on projects and pilot initiatives, and prior academic literature. He tracks the evolution of Iran’s rare earth and lithium sectors from the mid-2010s through early 2024, with attention to three forces:

1. domestic scientific and technical capacity,
2. opportunities for international partnership, and
3. U.S. sanctions pressure on Iran’s mining and metallurgical industries.

Key Findings: Iran’s Progress and the Roadblocks

1) Iran’s policy framework is designed for self-sufficiency.

Baskakov frames Iran’s industrial strategy through the doctrine of the “resistance economy,” launched in the 2010s to reduce vulnerability to external pressure. In this view, rare earths and lithium are not just commodities—they are inputs required to build an innovation economy, reduce dependence on oil revenues, and keep strategic industries functioning under sanctions.

2) Iran has made visible steps—but mostly at an early scale.

The study compiles multiple indications of progress: exploration campaigns, pilot projects, and announcements of successful extraction and concentrate production. Iran has reportedly produced a 99%-pure “mischmetal” alloy in 2016 (a mix of rare earth elements used for alloys and manufacturing), launched pilot extraction projects, and pursued recovery from iron ore, phosphates, and industrial residues. The paper also notes Iran’s ongoing reliance on imported rare earths, historically sourced through partners including China, the UAE, and Turkey.

3) China’s processing monopoly defines the playing field.

A central theme—highly relevant to REEx readers—is that processing and value-added steps are where power concentrates. Baskakov emphasizes that China’s cost advantages and industrial scale helped it dominate rare earth value chains. Even if Iran expands extraction, it will still face the question: can it process competitively, under sanctions, without becoming dependent on Chinese technology and investment?

4) Sanctions pressure remains a structural constraint.

Baskakov details how U.S. sanctions targeting metals, mining, manufacturing, and related sectors constrain Iran’s access to modern equipment, capital, and international partnerships. The paper argues that sanctions don’t just reduce exports; they slow industrial learning and the creation of durable processing infrastructure.

Implications: What This Means for Investors and Policymakers

For Iran, the strategic logic is clear: if access to critical materials is securitized globally, then domestic supply and processing become national security tools. For the global supply chain, Iran’s case reinforces a broader point: China’s dominance in processing means many “new” resource stories are not true diversification unless they build downstream capacity outside China.

If Iran succeeds, it could become a regional critical minerals node linking Eurasian markets. If it fails, it will remain a price-taker—dependent on external processors and vulnerable to sanctions shocks.

Limitations and Controversial Issues

The study relies heavily on public statements, reported project milestones, and secondary sources rather than audited industrial production data. Some resource claims—particularly lithium reserve estimates—remain contested and may require independent verification of grade, concentration, and economic recoverability. A second controversy is strategic: Iran may need Chinese investment and know-how to scale, which could trade one dependency (imports) for another (Chinese processing and capital)—a tension the paper implicitly surfaces.

Conclusion

Baskakov’s paper is best read as a strategic map of Iran’s intentions and constraints, not proof of imminent industrial-scale output. Iran’s rare earth and lithium ambitions align with its “resistance economy” doctrine and its drive for energy and technological sovereignty. But China’s processing dominance and U.S. sanctions pressure form a tight corridor: Iran can move forward, yet scaling competitively will likely require outside technology and capital, raising uncomfortable questions about who ultimately controls the value chain.

Citation: Baskakov, I. D. (2025). Development of Rare Earth Metals and Lithium Industries in Iran as a Factor of National Energy and Technological Security. Outlines of Global Transformations: Politics, Economics, Law, Vol. 18, No. 3, pp. 150–165. DOI: 10.31249/kgt/2025.03.09.

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