Rare Earth Exchanges

Will Central Asia be an Important Source of ‘New Oil? (Rare Earth Elements and Metals)? Can China’s and Russia’s Leverage in the Region be Countered?

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Highlights

  • Global demand for rare earth elements (REEs) and rare metals (RMs) is surging due to clean energy and AI needs, with a projected four-fold increase by 2024.
  • Central Asian countries, including Kazakhstan, Kyrgyzstan, and Uzbekistan, hold significant REE deposits, attracting interest from Western nations as an alternative to traditional suppliers.
  • Geopolitical complexities, including historical ties with Russia and China’s existing influence, pose challenges for Western involvement in Central Asia’s REE sector.

The battle for rare earth elements (REE) ensues along with rare metals (RMs) with an emphasis on uranium, lithium, tantalum, and a range of other chemical elements. Driving demand? What are the two main forces driving this race? 1) An economic need given the agenda of clean industry with zero emission on the horizon plus increasing dependence on artificial intelligence, necessitating more computing power. These forces converge leading to a four-fold boost in demand for REEs and RMs by 2024; 2) lack of supply. On this latter point many assume these rare earth elements are not as rare as we think but it’s the confluence of factors that make them rare. From processing controlled by China to war in Eastern Europe and China and Russia’s moves to bolster exports not necessarily favorable to the west. In the meantime, geopolitical instability plagues Sub-Saharan Africa, reducing the potential there. According to Sergey Sukhankin (opens in a new tab) writing for the Lowy Institute (opens in a new tab) all of this reality makes Central Asia a particularly interesting and relevant place.

The Lowy Institute, an independent think tank founded in April 2003 by Frank Lowy to conduct original, policy-relevant research regarding international political, strategic and economic issues from an Australian perspective, is based in Sydney, Australia and publishes The Interpreter.

Central Asia holds significant potential for rare earth elements (REEs) due to its vast mineral resources and strategic location. Several countries in the region, including Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, and Mongolia, have identified rare earth element deposits.

The Central Asian Future?

The above-mentioned dynamics plus a rare earth-endowed Kazakhstan (opens in a new tab), Uzbekistan and Tajikistan represent a viable alternative to traditional suppliers. This reality has not gone unnoticed by the West, that is the combined initiative of America, the UK, and the European Union, both looking to make moves to access the treasure trove of REE and RMs in Central Asian.

According to Sergey Sukhankin (opens in a new tab), a Senior Fellow at The Jamestown Foundation, and an Advisor at Gulf State Analytics (Washington, D.C.) “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 (opens in a new tab)’.”

Demand for Capital, Talent, and Technology

The need for capital, know-how and expertise and technology represents a top-of-mind concern among Central Asian leaders. The authors share a Russian language article (opens in a new tab) showcasing the Kazakhstan leader, Kassym-Jomart Kemeluly Tokayev inviting Germany to come and discuss REEs.

Many in the West fret however that due to a confluence of historical, economic, social, and cultural ties, Central Asia remains inexorably intertwined with interests of the Russians and Chinese.

In fact, according to the author Beijing  has taken the lead (opens in a new tab) in places like Kyrgyzstan and Tajikistan, where it controls almost all the leases of rare-earth mining.

This means the odds are against producers from the West, those interested in securing, tapping into and exploiting REEs and RMs from Central Asia.  Mr. Sukhankin conveys words of caution to such producers from places like America, England, and Europe? “Western countries may need to think twice about committing to expensive and (geo)politically risky projects in the region.”

Evidence abounds, from Russia critically focused on preserving Kazakhstan’s uranium deposits as one example of myriad entanglements between Russia and the region. France looks to the region for uranium, given geopolitical disruption in former colonies in Africa such as Niger, the tension takes on a disturbing nuclear proliferation element.

The odds are not great for the West (North America, Europe  and the UK, Australia and include Japan as an ally) for REE and RM prospects in Central Asia per Mr. Sukhankin’s logic and break down of the context underlying the unfolding interests. Anything is possible but with heavy debts to China and possible security repercussions from Russia, Central Asia’s decisions may be ultimately limited, barring some game changing, unfolding dynamics.

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