More valuable than gold: How Central Asia could challenge China’s rare earth monopoly
A story from the March 2024 edition of The Steppe
China’s monopoly on Rare Earth Elements (REEs) has Western nations worried about their dependency on the East Asian nation, due to their wide range of uses from computing to clean tech and modern weapons systems. And the key to breaking free from this dependency might just be held by Central Asian countries like Kazakhstan, Kyrgyzstan, Uzbekistan, and Tajikistan.
Analysts, recognizing the potential in these nations' substantial reserves, are urging Western governments to dive into investment ventures with their Central Asian counterparts. This could challenge China's dominance in the sector and bring major new mining operations online that could see a dramatic expansion in the number of market players.
REEs, indispensable components in now-ubiquitous technologies like smartphones, computers, medical devices, satellites, and electric cars, are essential to modern life. China's early capture of the REE production market has them firmly in the lead, commanding 70% of global rare earth ore extraction and a whopping 90% of rare earth ore processing.
The impetus behind the push to diversify away from China's control is particularly urgent for Western actors given Beijing's use of Western dependencies on its REEs to advance its political goals. Notably, incidents such as the 2010 dispute between the Japanese coast guard and a Chinese fishing vessel led Beijing to suspend all REE shipments to Japan for over two months.
Despite possessing abundant REEs, Central Asian states face challenges, which include insufficient geological survey data and underdeveloped mining laws. To address these issues and optimize resource utilization, a recent report from the International Tax and Investment Center, a D.C.-based nonprofit research and education organization, recommends collaborative efforts with entities like the U.S. Geological Survey. This collaborative approach can diversify the global REE market and mitigate the geopolitical risks associated with concentrated control.
The ongoing global shift towards clean energy and emerging technologies is expected to increase further the demand for REEs. Central Asia will be critical in shaping the world of the future, with the transformation counterbalancing to the declining demand for the region's fossil fuels. This shift contributes to the heightened geopolitical interest in the area, catalyzed by increased overland connectivity and investment in the region.