Kazakhstan and the West Look to Strengthen Rare-Earth Cooperation

Publication: Eurasia Daily Monitor Volume: 21 Issue: 99

(Source: Astana Times)

Executive Summary:

  • In June, Kazakhstan voiced its plans to declassify data on rare-earth and rare-metal deposits as well as a renewed effort to attract Western investment to mine and process the country’s vast reserves.
  • Russia’s war against Ukraine has exposed the European Union and Western countries’ reliance on China as the main exporter and Russia as the main transit country for rare earths delivered to Europe. Kazakhstan presents a promising chance to limit that dependency.
  • Attracting foreign investment and adopting new technologies will be key, and the United States, United Kingdom, and European Union are quickly becoming central players in maximizing the potential of Kazakhstan’s REE and RM industry.

On June 18, Kazakhstan’s Prime Minister Olzhas Bektenov revealed official plans to declassify data on the deposits of indium, scandium, vanadium, thallium, gallium, and other rare-earth elements (REEs) and rare metals (RMs). He also laid out a plan of attack for attracting more investment into the mining and processing of Kazakhstan’s REE and RM deposits. A similar move in 2021 that declassified data about lithium, tantalum, and niobium reserves, as well as other REEs paved the way for an investment boom in the industry (Kursiv Media, June 18). A prime example is the 2023 agreement between Kazakhstan and Germany to develop lithium deposits in the East Kazakhstan province. In February, Germany’s HMS Bergbau AG announced plans to invest $200 million into exploration and an additional $500 million into mining and building a lithium processing plant in Kazakhstan (Kursiv Media, February 16). These recent events are part of a series of critical developments unfolding in global REE and RM markets (see EDM, June 13). Russia’s war against Ukraine, Western sanctions, and growing geopolitical uncertainty have pushed the European Union, United States, and United Kingdom to reexamine their reliance on non-democratic and unpredictable regimes for critical raw materials. Long touted for its vast and promising REE and RM deposits, Kazakhstan plans to cash in on the rapidly growing demand for these minerals by teaming up with the West (see EDM, September 12, 2012).

Until February 2022, China’s disproportionately large share in the extraction and processing of REEs was not considered an issue in need of immediate consideration from some of the largest importers. Currently, China processes around 80 percent of all REEs, wielding critical influence over Western economic, medical, energy, aerospace, and defense sectors, in which REEs are extensively used. In the early 2010s, China’s share was even higher and reached 90 percent, resulting in a virtual monopoly over the processing of REEs (Izvestiya, February 26, 2023).

Experts’ warnings on the possible adverse effects of Beijing’s monopoly were accompanied with suggestions to explore Kazakhstan’s REE deposits. Some forecasts claimed that given investment and time, the country could eventually rival China (Orda.kz, March 11). These pronouncements largely fell on deaf ears in the West until Russia’s war against Ukraine exposed the European Union and Western countries’ reliance on China as the main exporter and Russia as the main transit country for REEs to be delivered to Europe. This presented a major dilemma due to Russia’s hostile regime and China’s enforcement of production and export limits.

The European Union became the first major actor to formalize cooperation in REEs and RMs with Kazakhstan. Brussels and Astana signed the “Memorandum of Understanding on Strategic Partnerships on Sustainable Raw Materials, Batteries and Renewable Hydrogen Value Chains” in November 2022. Kazakhstan’s then-Prime Minister Alikhan Smailov shared that the agreement “will create conditions for establishing financial and technological cooperation. … Our country has all the necessary factors of attractiveness for European business, including diversified energy sources and high transit and transport potential.” European Commission President Ursula von der Leyen highlighted that the accord “applies to rare earth mining, battery production, and green hydrogen” (Primeminister.kz, November 8, 2022).

The two sides are looking to expand Kazakhstan’s export of phosphorus and titanium, as well as other RMs, including beryllium, tantalum, rhenium, and vanadium, to Europe (KazTag, June 2, 2023). Astana has ample room to grow its share of the European market, as Kazakhstan already produces 19 of the 34 minerals identified as critical raw materials by Brussels. New exploration projects for REEs and RMs in Kazakhstan will likely add to this list (Dknews.kz, November 15, 2023).

Additionally, dialogue between Washington and Astana has picked up in cooperating on the extraction and export of REEs and RMs. In June 2022, the United States and Kazakhstan held the first meeting of their joint working group on trade and economic cooperation on REEs and RMs to discuss the possible intersections between Kazakh and US businesses in the sector. In 2023, REEs and RMs were atop the agenda for expanding ties between Washington and Central Asia as part of the “C5+1” diplomatic platform. In September 2023, US Ambassador to Kazakhstan Daniel Rosenblum stated that joint US-Kazakh projects for the extraction and processing of REEs and RMs are only a matter of time and “will definitely” come to fruition “in the future” (Kursiv Media, September 29, 2023).

The United Kingdom is another major actor who has shown growing interest in Kazakhstan’s REEs and RMs. In March, the two countries signed the “Roadmap for Cooperation on Critical Minerals” to lay the groundwork for establishing joint ventures in Kazakhstan. The stakeholders are off to a promising start since Kazakhstan already produces eight RMs and has deposits of eight more identified as critical by UK officials (Kazinform, May 21). British company Maritime House and the local Zhezkazganredmet have already started joint production of rhenium (Lsm.kz, March 27).

Astana’s enthusiasm and commitment to develop its REE and RM industry seeks to attract additional foreign investments. In 2023, the government adopted the “Comprehensive Plan for the Development of Rare and Rare Earth Metals for 2024–2028” and pledged to invest around $25 million to create a favorable setting for more foreign direct investment. As part of the plan, Kazakhstan seeks to increase its resource base, modernize and expand existing production facilities, introduce new types of products, extract new REEs and RMs, and overhaul the industry’s regulatory framework (Rusmet.ru, January 24).

At home, Kazakhstan’s President Kassym-Jomart Tokayev has called for an increase in the level of study of the country’s geological and geophysical potential. He specifically directed that the area of study be expanded from the current 1.5 million square kilometers to 2.2 million by 2026 (Bizmedia.kz, December 25, 2023). Tokayev previously named REEs and RMs as “new oil” and stated that whoever can “realize their potential in this area will determine the vector of technological progress throughout the world” (KazTag, September 1, 2023).

As of 2024, a total of 124 deposits of REEs and RMs were identified in Kazakhstan, of which 37 have been explored (Newsline.kz, March 27). If everything goes well and Kazakhstan manages to harness its vast potential, the country can claim its spot among the leading global producers of REEs and RMs and provide at least somewhat of a counterweight to Russian and especially Chinese dominance. Attracting foreign investment and adopting new technologies will be key. Here, the United States, United Kingdom, and European Union are stepping in and quickly becoming central players in maximizing the potential of Kazakhstan’s REE and RM industry.