The COP28 local weather summit in Dubai produced an settlement that goals to triple using renewable power, double power effectivity, and “speed up the transition to a cleaner and healthier economy” by 2030, so the world can meet its Paris Agreement objectives to restrict international warming to 1.5 levels Celsius. This power transition can’t be fueled by optimism and zeal alone. Rare earth parts (REEs) are required to gas this transition and are important for the expansion of each inexperienced business and rising expertise together with, electrical autos, robotics, drones, AI, and superior computing.
REEs will acquire even higher prominence and worth within the international financial system and human life within the coming years and a long time. Just as many laypeople comply with the worth of a barrel of crude oil, earlier than lengthy we are going to all would possibly know the price of a ton of dysprosium or scandium. As crude oil animated geopolitical and geoeconomic competitors within the twentieth century, the rest of the twenty first century will arguably be formed by contests over REEs. Projects are afoot for mining strategic minerals from the ocean ground to the floor of the moon.
If REEs are the crude oil of the twenty first century, then Central Asia and Mongolia stands out as the Saudi Arabias of those strategic minerals. The coronary heart of the Eurasian landmass sandwiched between Russia, China, and the Indian subcontinent, contains a inhabitants of roughly 80 million individuals, six international locations (Kazakhstan, Kyrgyzstan, Mongolia, Tajikistan, Turkmenistan, and Uzbekistan), and mixed is about half the scale of Europe. It additionally sits on a veritable ocean of REEs based on the United States Geological Service.
Just just like the Middle East, the area is topic to intense and divergent political pressures. Russia and China border the area, every exercising their affect on the different’s expense and keen to maintain the West out. Afghanistan and Iran hem within the area to the south, whereas adjoining however politically sluggish and clumsy (and sometimes culturally tone deaf) Europe, and strategically invisible India desperately search their avenues into the area to realize entry to enterprise alternatives together with low cost commodities. The United States is generally pushed by navy concerns, such because the tragically ineffectual and extended conflict in Afghanistan. Washington is attempting its finest to point out the flag, however slowly dropping affect within the area.
Yet, the West is already taking motion to enter the REE market. Kazakhstan, the biggest producer of REEs within the area, confidently asserted it will possibly present “all the 30 critical raw materials the [European] bloc needs.” Kazakhstan is betting large on REEs, that includes them at the start at its annual Astana Financial Forum the place it tries to woo buyers.
During the discussion board, EU Ambassador to Kazakhstan Kestutis Jankauskas inspired the EU-Kazakh REE technique, noting “there are quite big possibilities to develop business in the area of green hydrogen, climate change… Some of this is driven by necessity because we need rare earth metals for the Green Deal. Kazakhstan needs technologies, while the EU needs alternative supply sources.” Kazakhstan’s REEs and already well-developed mining sector make them pure companions, creating a robust basis for a strategic relationship between Astana and Brussels. This causes consternation in Moscow and Beijing, as China at present monopolizes REE refining, a lot to the frustration of the West.
Kazakhstan could also be setting regional traits, however it’s hardly alone. Mongolia, additionally closely invested in mining and hemmed in by Russia and China, at present doesn’t mine REEs however is invested in exporting them. When French President Emmanuel Macron visited Mongolia in May, their talks emphasised “cooperation on the extraction and trade of minerals used in satellites, cell phones and other key technologies” – REEs. When Mongolian Prime Minister Oyun-Erdene Luvsannamsrai visited Washington in August and met with Vice President Kamala Harris, the Joint Statement on the Strategic Third Neighbor Partnership additionally not directly pointed to REEs.
Uzbekistan, probably the most populous nation within the area, is keen to not miss the chance that REEs current. The International Energy Agency has already recognized Uzbekistan as important for a inexperienced power transition, with the worth of its mineral assets estimated at over $5 trillion. Alouddin Komilov from Uzbekistan’s Center for Progressive Reforms identified that amidst the EU’s surge of curiosity within the area, REEs fill not only a important international want, however a pathway to growth.
Tiny Kyrgyzstan is so enthused with its personal REE potential that it might have killed the goose earlier than it laid its golden eggs, getting into right into a expensive authorized battle over the REE exporting mine Kutessay-II to nationalize it in 2014. Lawsuits proceed practically a decade later.
Even Tajikistan, a virtually failed state affected by corruption, nepotism, and drug trafficking issues, believes that Central Asia’s REEs might be its salvation. In July, Ilkhom Oymuhammadzoda, head of its Main Directorate of Geology, introduced a terrific effort being put into REEs. This follows the 2014 announcement of a decade-long survey to find REE deposits.
In the area, solely opaque Turkmenistan appears to be spurring REE growth.
Despite the apparent potential and unmet demand, Central Asia’s REEs are understudied by Western actors and buyers. While a 2022 report by the Caspian Policy Center and a 2023 report by the German Federal Institute for Geoscience and Natural Resources give attention to these points, the quickly evolving nature of the topic makes them in want of an replace.
The newest expansive research, a just-released 2023 report by the Energy, Growth, and Security Program on the International Tax and Investment Center, which I co-authored, addresses each inner and exterior components of the necessity for this important sector’s growth. With my co-authors Dr. Ariel Cohen and Wesley Hill, we discover that Central Asia’s REE potential is ripe for an inflow of private and non-private funding – however this funding must be rigorously structured to efficiently start manufacturing, and keep away from financial seize by China.
Central Asia might develop into a brand new hub of REE extraction. Right now, the United States shouldn’t be paying due consideration whereas Russia and China are posed to pounce. If Washington and Brussels wish to be sure that the phrases of the inexperienced power transition and the important applied sciences of the twenty first century aren’t dictated by Moscow or Beijing, European and American involvement and funding within the area must surge, and rapidly.
Source web site: thediplomat.com