Russia Approves Expanding Rare Earths Mining And Refining Program
Russia Approves Expanding Rare Earths Mining And Refining Program
Executive Summary:
- Russian President Vladimir Putin on November 9 directed the government to create a roadmap to expand rare earth mining and refining, aiming to increase annual indigenous production to 3,000 tons by 2030 to meet domestic demand.
- Russia holds the world’s second-largest reserve of rare earth elements (REEs), yet currently imports 90 percent of its requirements, relying heavily on the People’s Republic of China (PRC), which maintains a near-monopoly on global production.
- Moscow’s barriers to becoming a major REE producer include interconnected bottlenecks spanning technological limitations, infrastructure constraints, regulatory hurdles, geopolitical factors, and funding.
On November 9, Russian President Vladimir Putin directed the Russian government to immediately prepare a roadmap for the long-term development of Russia’s REE mining and refining facilities. The government was instructed “to approve an action plan (roadmap) for the long-term development of the extraction and production of rare and rare earth metals, taking into account the instructions given earlier” by December 1 (Nezavisimaia Gazeta, November 9). While Russia has massive mineralogical reserves, it shares many of its competitors’ problems in expanding its modest indigenous REE industry, including significant financing and technology challenges.
Six months before Putin issued his directive, Russia’s Department of Metallurgy and Materials of the Ministry of Industry and Trade Deputy Director Konstantin Fedorov announced that the Russian government had allocated 60 billion rubles (about $744.9 million) of state support for the development of Russia’s REE industry (Interfax, March 25). Fedorov noted that Russia’s current domestic REE production was only 50 tons annually. In comparison, Russia imported about 1.5 thousand tons of REEs. The government projected that, with state support, Russia’s indigenous REE production could reach 3,000 tons annually by 2030 and fulfill domestic demand. Fedorov added that the government intended to increase annual production of the rare metals lithium, tungsten, titanium, zirconium, molybdenum, niobium, and oxides of light rare earth metals to 50 thousand tons and tantalum, beryllium, hafnium, indium, gallium, rhenium, and oxides of medium-heavy rare earth metals to 80 tons by 2030.
Four months after Federov’s announcement, the head of the Russian Ministry of Industry and Trade, Anton Alikhanov, declared that the Russian government intended to increase REE production by 700 percent by 2030 (RIA Novosti, August 11).
On October 9, the PRC imposed new export controls on five REEs, in addition to the seven already restricted, heightening global anxiety over possible shortages. The next day, U.S President Donald Trump vowed to add a 100 percent tariff on PRC imports (Radio Free Europe/Radio Liberty, October 14).
The chaotic situation seems to provide an opportunity for Russia to export REEs, as last year the government announced that Russia ranked second in the world in REE reserves, with around 28.7 million tons. Production, however, accounted for no more than 1 percent of that total, processing was practically non-existent, and the industries’ share of imports was 90 percent—forcing domestic enterprises to import nearly all their requirements from abroad, primarily from the PRC (Nezavisimaia Gazeta, July 29, 2024). Moscow nevertheless hopes to reduce the country’s dependence on imported raw materials by 2030 and to accelerate REE production to 3,000 tons annually.
Deposits of REEs are scattered throughout Russia, but they are currently mined only in the Murmansk oblast’s Rosatom’s Lovozeroskoe deposit, discovered in the 1920s, and where magnesium production began a decade later. REE “raw materials” production started in 1971. Lovozeroskoe contains almost half of all Russian REE ore deposits, which are sent for processing in Russia’s sole REE production facility—the Solikamsk Magnesium Plant (SMZ) in the Perm krai (RBC, March 2). Murmansk’s REE deposits are estimated to be around 13.2 million tons, followed by Iakutia at around 8.5 million tons, and the Krasnoyarsk krai with around 2.9 million tons (Delovoi Profil’, March 24). The country’s total reserves of 29 rare metals amount to 658 million tons, of which REE reserves are 28.7 million tons, according to the Russian Ministry of Natural Resources (Vesti.ru, July 1).
Beyond domestic need, international shortages and soaring prices are driving the Russian government’s newfound interest in expanding its REE industry. Scandium is considered the most expensive REE due to its unique features and high demand in various industries. Solely produced by the PRC, scandium is used in the space industry, the defense sector, and the automotive industry. The PRC’s REE embargo is driving up prices for available scandium, with some needed by the U.S. military now costing 500–600 percent more than before the PRC implemented its recent mineral restrictions. Industry middlemen reported that one company said it was recently offered a supply of the REE samarium at 60 times its pre-restrictions price (Wall Street Journal, August 3).
The development of Russia’s REEs resources faces several challenges, including the necessity to modernize infrastructure, access to high-tech equipment, and fierce competition with the PRC. To overcome these difficulties, Russia will have to approve and implement a comprehensive development roadmap based on the PRC’s experience while creating its own technological chains and strategic partnerships. Beyond the PRC–U.S. trade wars and the rising risks of sanctions affecting successful Russian REE investment projects, the government will likely find it necessary to promote the development of its indigenous REE industry by involving its partner nations in BRICS, the Shanghai Cooperation Organization, and the Eurasian Economic Union. [1]
Beyond its traditional partners, Russia discovered that Trump’s re-election provided an administration markedly open to increasing bilateral cooperation despite Russia’s ongoing so-called “special military operation” (SVO) against Ukraine.
On February 26, a month after his return to the presidency, Trump said during a press conference that he was interested in acquiring Ukrainian REEs in an exchange for military aid, noting an agreement with Ukraine on its REEs could be worth $1 trillion, “a very big deal” (RBC, February 26). An agreement between the United States and Ukraine was planned to be signed two days later, but the deal was never concluded.
At the same time he was pitching a REE agreement with Ukraine, Trump was also negotiating with Russia, stating on February 26 that “Washington is interested in Russia’s vast reserves of rare earth metals and other very valuable resources that the country has” (RBC, February 26). A major obstacle for such an agreement remains the Western sanctions regime in response to Russia’s war against Ukraine, blocking the participation of U.S. companies in Russian projects. Despite Trump’s Ukraine project, Putin told VGTRK TV presenter Pavel Zarubin that Russia was ready to work with other foreign partners on rare-earth metals, not just the United States (RBC, February 24).
Seven months after Putin’s proposition, Association of Producers and Consumers of Rare and Rare Earth Metals chairman Ruslan Dimukhamedov at the Eastern Economic Forum (EEF) said that U.S.–Russian cooperation on REEs remained possible and would be beneficial to both sides, with Russia seeing it as a potential incentive to lift sanctions (Lenta.ru, September 9).
According to Russia’s Ministry of Natural Resources, investments in REE search and exploration will almost quadruple in 2025, reaching 200 million rubles (about $2.498 million). The ministry expects that the launch of separation production at SMZ will allow Russia to enter the top five world leaders in the extraction of rare earth metals by the end of the year (Dprom.online, August 18). At the EEF, the Russian Ministry of Industry and Trade stated that REE growth in Russia by 2030 was predicted to reach 100 billion rubles per year (about $1.249 billion) from 29 billion rubles (about $362 million) within the framework of the federal project, an increase in output of 350 percent (RIA Novosti, September 5).
In seeking to compete with the PRC, Russia faces strong headwinds as the PRC has carefully secured its current leadership through decades of large-scale investments, gigantic labor costs, and flexible environmental impact standards. In 1990, the PRC declared REEs a strategic resource, thereby banning foreign investment in the sector. The PRC is now the only country with a complete REE production cycle, including mining, processing, and the production of final products. All countries in the REE global market depend on the PRC, and its entrenched dominance and technological expertise make it difficult even for Western countries to compete (Mining-media.ru, May 21, 2023).
The PRC’s monopoly on REE production will continue for the foreseeable future, as it took the country decades to develop its industry, and there are no apparent technological shortcuts. The International Energy Agency (IEA) emphasizes the PRC’s current dominant role in REE development, noting that it accounts for 92 percent of global production despite mining only 61 percent of the world’s reserves (The Times of India, June 10).
The world faces an uphill struggle to create alternative REE industrial complexes in a timely fashion. In 2024, the United Nations Industrial Development Organization (UNIDO) projects that by 2030, the PRC will account for 45 percent of value-added global manufacturing, compared to 11 percent for the United States, 5 percent for Japan, and 3 percent for Germany (UNIDO, October 2024).
The potential stakes for Russia are enormous, as the global REE market is expected to more than double in value, reaching nearly $11 billion, by 2030 (Sputnik, January 12). Having seemingly tapped out U.S. fiscal and technological expertise due to Western sanctions, Russia has now turned to the PRC.
Putin discussed sharing PRC REE technology with Chinese Communist Party General Secretary Xi Jinping during his visit to Beijing on September 1–2, to which he received a negative response. According to the PRC publication Sina, Putin’s hosts explained that the PRC does not share its proprietary REE technologies with third countries, as the PRC government wants to maintain its global monopoly in the strategically important industry (Runews24.ru, September 13). Seeking to mitigate the seeming finality of the PRC’s position, on September 8, First Deputy Russian Prime Minister Denis Manturov said that Russia “some time ago” began discussing the topic with the PRC, but it had not yet been possible to reach an agreement with Beijing (Federalpress.ru, September 8).
While Russia has been endowed with a vast array of mineralogical reserves, a structural transformation of Russia’s REE sector will require significant resources, time, coordinated policies, and advanced technologies. Russia’s barriers to becoming a major REE producer include interconnected bottlenecks spanning technological limitations, infrastructure constraints, regulatory hurdles, geopolitical factors, and funding. The structural gaps preventing Russia from capitalizing on its rare-earth endowment echo global supply chain vulnerabilities, in which technological expertise remains concentrated in a handful of facilities worldwide, primarily in the PRC. While several companies have been publicizing new REE projects and processing facilities, most of them will take many years to come to fruition. Developing mines, constructing processing facilities, and obtaining environmental permits involve high costs and strict ecological standards. Quickly expanding Russia’s REE capabilities will likely require foreign investment and technology; whether Putin can inveigle either from the PRC, the United States, or other countries, remains to be seen.
Note:
[1] BRICS+ is a loose political-economic grouping originally consisting of Brazil, Russia, India, the PRC, and South Africa.
