Global focus on strategic minerals crystalizes in Eurasia
Critical minerals and rare earths have emerged as key supply chain vulnerabilities for the U.S. and EU given their dependence on China.
In a nutshell
- Ukraine’s mineral reserves are a major strategic interest for the U.S.
- Serbia is a crucial lithium center for the EU’s long-term requirements
- Untapped strategic minerals across Eurasia are ripe for development
- For comprehensive insights, tune into our AI-powered podcast here
Rare earth elements and critical minerals are essential components for both non-military and military technologies and are at the core of geostrategic realignments worldwide. Their supply chains are mostly dominated by China. The United States and the European Union are making up for lost time, seeking to stake out deposits, supply chains and processing capabilities. Both are likely to focus their efforts in Eurasia.
Rare earths are a group of 17 chemically similar elements. Despite their title, these elements are relatively abundant in the Earth’s crust, albeit dispersed and difficult to extract economically.
Critical minerals are naturally occurring substances such as lithium, cobalt, graphite, copper and nickel. They are vital building blocks for electronics, renewable energy technologies such as wind turbines, solar panels and electric vehicles (EVs), as well as military applications involving advanced weapon systems and defense electronics. The global competition for strategic minerals is primarily driven by a concentration of supply in a few regions.
China’s strategic hold over essential mineral resources
China has long been the major player in the rare earths market, controlling over 60 percent of global production and holding a large proportion of reserves. After solidifying its position through decades of strategic investments and policies, Beijing dominates the extraction and processing of both critical minerals and rare earths. China’s focus on mining, refining and processing rare earths has given it geopolitical leverage and considerable influence in shaping global supply chains.
During the 1990s, China declared rare earths “strategic resources,” implementing export quotas and tariffs to conserve resources and promote domestic industries. For instance, in 2010, China reduced its rare earth export quotas by 40 percent, significantly hindering global supply chains.
Beijing’s overwhelming control over critical minerals and rare earths has created vulnerabilities for the U.S., the EU and Japan.
China’s extensive control accounts for 35-40 percent of global rare earth element reserves and nearly 90 percent of processing. China refines 73 percent of cobalt, 68 percent of nickel, 60 percent of global lithium and 40 percent of copper. The country also dominates downstream manufacturing using essential minerals, such as in magnet production. It produces nearly 80 percent of the world’s EV battery cells and hosts around 75 percent of global lithium-ion battery mega-factories.
As geopolitical tensions have flared up in recent years, Beijing’s overwhelming control over critical minerals and rare earths has created vulnerabilities for the U.S., the EU and Japan, all of which have expressed growing anxiety over potential supply disruptions. China has used its rare earth dominance as a geopolitical tool. In 2010, for instance, Beijing cut off rare earth exports to Japan during a territorial dispute, highlighting the vulnerability facing any nation relying on a single source for these crucial materials. More recently, Beijing has banned the supply of several critical minerals to the U.S.
U.S. seeks major deal over Ukraine’s resources
The administration of U.S. President Donald Trump has been especially keen to conclude an agreement with Ukraine to secure its substantial untapped reserves of strategic minerals. Ukraine’s President Volodymyr Zelenskiy initially proposed American access to his country’s resources as part of his 2024 “Victory Plan,” stating, “Ukraine is ready to sign [the agreement] at any time and in any convenient format. We see this agreement as a step toward greater security and solid security guarantees.”
Ukraine, strategically located on the western side of the Eurasian landmass, could contribute materially to both U.S. and European long-term requirements. According to the Ukrainian Geological Survey, the country holds approximately 5 percent of the world’s mineral resources, encompassing 23 of the 50 materials deemed essential by the U.S. government.
Facts & figures
Noteworthy mineral deposits in Ukraine
The country is home to one of Europe’s largest lithium reserves, estimated at half a million tons, representing 3 percent of global reserves. Its titanium and uranium reserves account for 7 percent and 2 percent of world deposits, respectively. Titanium is vital for the aerospace and defense industries, and Ukraine’s reserves could help diversify supply chains for the U.S. and EU while reducing dependence on China.
Ukraine also holds around 5 percent of the world’s rare earth deposits. With global demand for these elements and critical minerals expected to grow, Ukraine’s resources present a significant potential geopolitical enhancement for the U.S. if it can access and secure these reserves.
On the downside, approximately 40 percent of Ukraine’s mineral resources fall within areas currently held or annexed by Moscow; an even larger portion is under Kyiv’s control but lies only a short distance from Russian military positions. Securing American access to Ukraine’s deposits could be part of a broader strategy to ensure these crucial materials are not only easily accessible, but also sourced from a nation that is more aligned to long-term U.S. strategic interests.
Europe’s east is key for EU minerals supplies
The EU sees the strategic importance of stable supplies of critical minerals and rare earths essential for technologies that are pivotal to its green and digital transitions. The Critical Raw Materials Act is intended to reduce dependence on single-source suppliers: It aims for the EU, by 2030, to domestically extract at least 10 percent of its annual consumption of strategic raw materials and process at least 40 percent. It also streamlines permitting and designates certain “Strategic Projects” for expedited development.
The bloc has initiated several measures to enhance domestic extraction, processing and recycling capabilities, and Sweden aims to play a strategic role in Europe’s rare metal diversification. Brussels is also giving particular attention to countries in Central and Eastern Europe, even those beyond EU borders.
In mid-2024, Serbia and the EU signed a memorandum to develop a partnership in critical raw materials and establish a value chain for battery and electric vehicle manufacturing. Serbia possesses substantial lithium deposits, among the largest in Europe. United Kingdom-based mining company Rio Tinto has been at the forefront of exploring Serbia’s lithium potential.
Despite facing significant environmental opposition, Rio Tinto has intensified efforts to gain public approval for a large-scale lithium mine in Serbia’s Jadar Valley. The proposed mine could supply enough lithium for batteries in 1 million electric vehicles annually, and would be critical for Europe’s EV market and clean energy goals.
Read more by trade and regulatory expert Bob Savic
- Sanctions and the geopolitics of trade
- China readies its legal arsenal for a trade war with Trump
- As Trump returns, the U.S. is set to toughen its line on China
NATO member Albania is recognized for its rich deposits of chromium and other minerals. Its strategic location, mineral wealth and security orientation position it as a potential player in the European supply chain for critical minerals.
China, too, has been active in the Western Balkans through investments and infrastructure projects. Beijing’s involvement raises concerns in both the EU and the U.S. about its geopolitical role in the region and its environmental impacts on local economies.
Estonia has been among the most prominent regional nations, leveraging processing capabilities and extraction opportunities to position itself as a key player in the rare earths sector. Its most notable operation in the field is a subsidiary of Canada’s Neo Performance Materials, which can process 3,000 tons of rare earth oxides annually. In 2024, Australian rare earths producer Hastings Technology Metals agreed with Estonia’s investment agency to bolster the European supply chain for critical minerals.
Scenarios
Most likely: The U.S. and EU expand strategic interests across Eurasia
The competition for critical minerals and rare earths is more than just an economic challenge. It is a fundamental issue of national security and geopolitical considerations that define the competition for these vital resources – and it is set to intensify. The Eurasian continent is the principal region for exploration and production given its high concentration of these resources. Geopolitical rivalries will play a significant role in shaping supply chains and the future of the region, home to countries of the Global Majority which are often mid-aligned between rival western and eastern blocs.
One such country is Mongolia. As a landlocked nation sandwiched between China and Russia, it may appear a risky candidate for Western investors in its strategic minerals sector. Even so, Ulaanbaatar is keen to attract U.S. and European companies to extract strategic minerals from its vast reserves. According to an estimate by the U.S. Geological Survey, Mongolia should have 31 million tons of rare earth element reserves, second only to China’s 44 million tons.
Considering that neighboring Inner Mongolia, a Chinese autonomous territory, is the main global supplier of rare earths with its Bayan Obo mine supplying up to 45 percent of the world’s output, it seems likely that similar geological characteristics extend to Mongolia.
Currently, only three companies are actively exploring for rare earth elements in Mongolia: a UK minerals explorer and two operations owned by one of the country’s largest commercial banks. A bolstering of ties between the U.S. and Mongolia could result in significant investment into the country’s nascent rare earths sector in coming years.
Nevertheless, Mongolia’s pivot may be more symbolic than economically pragmatic. China accounts for 90 percent of its mineral exports, including copper and coal. Should Ulaanbaatar decisively tilt toward Washington at a time of heightening geopolitical tensions, Mongolia’s exports could face significant headwinds.
Another Eurasian country sharing extensive borders with Russia and China is Kazakhstan, which also seeks investments into its strategic mineral sector. In 2021, the country possessed the eighth-largest rare earth element reserves globally, estimated at 2 million tons. However, annual production figures are relatively modest; ranking 12th in production, extracting 40,000 tons of rare earth elements. Astana is working to enhance domestic production capabilities, with plans to increase investment by 40 percent under the Comprehensive Plan for the Development of the Rare and Rare Earths Metals Industry for 2024-2028.
At present, a U.S. company is exploring for deposits in Kazakhstan, while a German investor is developing lithium. Given its recognized role as a neutral country and reliable supplier of mineral and energy resources, U.S. and European investors are likely to sponsor more projects.
Controversially, Russian President Vladimir Putin is wooing the U.S. into rare earths and critical minerals, saying that Russia possesses significantly more such resources than Ukraine. Major rare earth deposits are located in the country’s north, around Murmansk, in the southern Caucasus region, and in the Russian Far East, especially in Irkutsk, Yakutia and Tuva.
In seeking to develop these resources. Mr. Putin has acknowledged substantial capital investment is required. He stated that he is “open to cooperation with our American partners in not only administrative and governmental spheres, but also private companies if they show an interest in working together.”
The possibility of this happening is growing in light of the Trump administration and the Kremlin having recently outlined their intention to build relations “far beyond” a deal over Ukraine. Such cooperation could extend to developing sizeable economic and investment links.
Equally likely: The U.S. and EU expand strategic supply chains globally
President Trump recently announced that he would take “historic action to dramatically expand production of critical minerals and rare earths” in the U.S. Nevertheless, given the global nature of the critical minerals supply chain, the U.S. and other nations can be expected to increasingly employ strategic partnerships and trade agreements in securing access to these vital minerals from worldwide sources.
For instance, the U.S. has already entered into several such agreements with Australia, Canada and several African nations, aiming to ensure a reliable supply of minerals while reducing imports of minerals from China. The partnerships focus on securing access to strategic materials and also emphasize developing sustainable and transparent mining practices to avoid the environmental and social impacts often negatively associated with mining in developing countries. Some African countries themselves are courting the U.S. and EU, and like Ukraine, seeking to leverage their mineral wealth for security.
Similarly, the EU has moved forward with plans to create a European Critical Raw Materials Alliance, which aims to strengthen the its position in the global mineral supply chain. This initiative includes measures to boost recycling, foster research into alternative materials and build more resilient supply chains across Europe.
Trade agreements, such as those between the EU and the Mercosur group of South American countries rich in lithium reserves, have also become an important part of the bloc’s strategy in diversifying sources of strategic minerals. These are likely to further expand over time.
Contact us today for tailored geopolitical insights and industry-specific advisory services.
Sign up for our newsletter
Receive insights from our experts every week in your inbox.
