Competition for Control of Rare Earths Triggering Great Power Conflict in Central Asia

Executive Summary:

• Control of access to rare earth minerals that are critical for the development of technologies is a driver in the strategic thinking of Western powers, as well as the People’s Republic of China and Russia. 
• Recent developments in Central Asia highlight the growing importance of rare earth minerals in global geopolitics as these resources are now central to technological and strategic power. 
• Central Asia as a region risks falling into conflict as governments prefer to involve multiple actors so that a single foreign power cannot hold sway over the country and undermine the central government.

Three developments over the past month highlight an important new reality in geopolitics. First, Russian forces occupy a significant lithium deposit in eastern Ukraine, meaning Russia now has greater reserves of that rare earth mineral than the United States (Window on Eurasia, January 16). Second, the United States has established sanctions on a Russian lithium mining facility near Murmansk that the People’s Republic of China (PRC) is helping Moscow develop (The Barents Observer, August 1, 2024, January 16). Third, Washington and Kyiv have been discussing a deal in which the United States will continue to support Ukraine with its defense needs in exchange for Kyiv’s agreement to give the United States access to Ukrainian rare earth deposits (Reuters, February 5; Kyiv Independent, February 7). Control of access to rare earth minerals is critical to the development of the most advanced technologies, and the denial, or at least dominance, of such access to others now lies behind the strategic thinking of major powers. 

That reality may be most clearly evident regarding Ukraine, where the Russian invasion continues. It extends, however, far beyond that country and increasingly involves Central Asia, where the contest between the East and West has been intensifying not only because of the PRC’s dominance in the rare earth field but also because of Beijing’s expansion into Central Asia. This region contains many of the largest, but as of yet underdeveloped, rare earth fields in the world, but its governments need outside help to develop the rare earth sector (U.S. Department of the Interior, March 2018; Cabar.asia, March 29, April 3, 2024; Daryo, February 8). While some consider that the PRC is so far ahead in Central Asia that it cannot be challenged, the stakes in this competition are so great that the United States and European Union have begun to challenge it and are having some success. The United States and European Union can offer greater investment and expertise with fewer strings attached than the PRC and its ally Russia. Central Asian states want to diversify foreign investment in this sector lest the PRC use an exclusive position to dominate them in ways they believe they can avoid by incorporating additional partnerships, which may countervail the PRC’s presence (see EDM, June 13, 2024). 

Western progress toward this aim has sparked anger in Moscow and concern in Beijing. On the one hand, Moscow views U.S. and European moves in Central Asia regarding the PRC as moves against itself (Problems of the Post Soviet Era, 2024; RITM Eurasia, October 15, 2024, February 6, 10). On the other hand, Beijing is concerned that what had become its new backyard is being challenged before it can extend full control over that region (The Oxford Institute for Energy Studies, June 2023). Such concerns have led some analysts to conclude that Central Asia, as a result of outside interests in rare earths, is on its way to becoming “an emerging battlefield” between the East and West, military language that is generating concern both in Central Asia and beyond its borders (Lowy Institute, October 21, 2024). These reactions are having the unexpected result of exacerbating differences between Russia and the PRC rather than leading them to come together more closely (see EDM, April 27, 2023).

Unsurprisingly, the Central Asian countries are concerned about such prospects. On the one hand, they very much hope that their reserves of rare earth minerals will help them develop economically and even give them more political heft internationally, much as oil did the petroleum-exporting countries in the past (The Diplomat, December 15, 2023; see EDM, June 13, 2024). On the other hand, while Central Asian countries want participation from both the East and the West to ensure their ability to pursue a balanced foreign policy and not fall entirely under one side or the other, they are concerned that the presence of both in today’s more unstable world could lead to conflicts between these outside powers that would overwhelm them. Some in both the East and the West are insisting that they either choose sides or face disaster. For many in the region, however, choosing sides appears less a salvation than a doorway to disaster, especially because of their problems with the development not only of stable political and military institutions but also of the rare earth sector itself (e.g., Cronos Central Asia, February 5, 2022).

The problems of Central Asian countries, in general, are well-known, including issues such as border disputes, Islamist violence, relationships with Afghanistan, water shortages, and institutional difficulties (see EDM, May 19, 2021, March 7, 2024, July 15, 2024, February 10). Aruzhan Meikhanova, a senior researcher at Astana’s National Analytic Center, provides a useful survey of these. She says that while Central Asia has large proven reserves of rare earths, it has generally failed to overcome problems with exploration, extraction, and processing. To achieve the breakthroughs these countries hope for, they will have to obtain significant outside help as well as change many of the ways they now do business (Carnegie Politika, January 27).

Modernizing exploration and extraction is “a critical first step,” Meikhanova says, pointing out that most maps of such resources are left over from Soviet times (Carnegie Politika, January 27). Kazakhstan, for example, spent more money on exploring for underground minerals in 1990 than it did for all the years between 2003 and 2023 combined (Dprom.kz, March 5, 2024). As a result, the countries of Central Asia may actually have far larger reserves of rare earths than they or outsiders know about. That reality could lead foreign powers to get even more involved now to be in a better position later, something that could lead to conflicts long before the countries of the region are in a position to counter them. These possibilities have already sparked predictions about the future that could have effects far different than intended (The Times of Central Asia, March 14, 2024). 

At the same time, Meirkhanova continues, the countries of the region must address problems involving extraction, such as shortcomings in institutional frameworks; inconsistent tax regimes, and the lack of means to control the environmental impact of mining; and others involving processing (The World Bank, February 2023; Carnegie Politika, January 27). In addressing these issues, Central Asian countries can get full value from their reserves rather than being paid by other countries only for unprocessed ores as is sometimes the case today (UN Trade and Development, April 26, 2024). Navigating this minefield will not be easy for the regional countries or outside powers. In today’s overheated environment, given the increasing significance of rare earths for the world economy, there is an ever-increasing danger that one or another side will miscalculate with the potential for triggering the kind of explosion no one wants, and all would suffer from.