Titanium quarry in Zhytomyr region. Photo: Roman Pilipey / AFP / Scanpix / LETA
The issue of achieving peace in the Russian-Ukrainian war largely depends on agreements on the extraction of rare earth metals. Kiev offers to extract these metals on its territory in order to receive funds for the restoration of the economy and security guarantees. Moscow, in response, notes that Russia has many times more reserves of these metals and says that their extraction can be established in the recently annexed territories of Ukraine.
Why does the United States need these metals? Why is their importance supposedly overestimated?
Mikhail Korostikov, a researcher at the Belgrade Center for Security Policy, clarified this issue for the Carnegie Politika project.
Why does the US need rare earth metals?
Donald Trump's focus on rare earth metals is no coincidence. This group of 17 elements is crucial for the production of high-tech products, from electric cars and solar panels to reusable missiles and aircraft. For example, each F-35 aircraft uses about 400 kg of rare earth metals. At the same time, the US imports more than 70% of these metals from China alone.
Washington has been trying to overcome this dependence for a long time, but these efforts have so far been unsuccessful. In 2018, the US tried to increase tariffs on rare earth metals from China, but was soon forced to abandon this idea. Because China mines 60% of the world's rare earth metals and processes 90% - there is no alternative to replace it in this area.
In 2019, Beijing announced that it would restrict the supply of rare earth metals to the United States in response to the trade war. This caused a short-term panic and a 150% increase in the price of some metals.
Washington immediately announced the “Federal Strategy for Ensuring the Supply of Essential Minerals.” This document outlined plans to dramatically increase production. Since then, various US government agencies have spent billions of dollars in this direction. Among the largest projects are the construction of the Lynas Rare Earths Ltd plant in Texas and the expansion of the Mountain Pass mine in California.
These efforts have not been in vain. The United States produced 28 thousand tons of rare earth metals in 2019, and by 2024 this figure will reach 45 thousand tons. However, the overall balance has not changed due to the growth in consumption: in 2019-2024, China's share of US rare earth imports averaged 72 percent.
Why are rare earths difficult to mine?
Establishing control over the production and supply of many minerals is one of China's main trump cards in the trade war with the United States. In December 2024 — before Donald Trump was re-elected president — Beijing completely banned or severely restricted the export of antimony, gallium, germanium, and graphite in response to US sanctions on Chinese semiconductors. Although these metals are not included in the rare earth elements, Washington has included them in the list of the most important minerals for industry.
This restriction has led to serious economic losses for the United States - the price of antimony has increased by 200 percent, and the country's gross domestic product has decreased by $ 3.4 billion. At the same time, China controls only 48 percent of the world's antimony production, so this was just a warning. If Beijing really restricted the supply of rare earth metals to the United States, it would be a major blow to all high-tech industries in the United States, from smartphones to military aircraft, and the losses would amount to hundreds of billions of dollars.
There are several reasons why the United States should address the problem of reducing its dependence on China for rare earth metals. First, the nature of the deposits containing these metals. Contrary to their name, rare earth metals are widespread on Earth, but their concentrations that make economic sense for mining (for example, 1-2 percent of the metal per ton of waste soil) are extremely rare. The US has 1.9 million tons of proven reserves, while Russia has 3.8 million tons. But these figures are nothing compared to China's huge reserves of 44 million tons. In addition, China not only has large reserves, but also has a high concentration of ore.
Secondly, the characteristics of their development. The extraction and processing of rare earth metals requires huge investments. At least $500-700 million will have to be spent on the initial stages of the project, not counting additional costs. At the same time, the market price of metals is very volatile, which makes these projects a risky investment. Therefore, in 2024, 84% of rare earth metal projects around the world were financed by the state budget, while the private sector showed little interest in them.
Thirdly, these metals are never found in nature in their pure form, they are in the form of complex compounds that are difficult to separate. This process requires special technologies. Over the past 30 years, almost no one except China has made serious investments in this area. Chinese leaders saw rare earth metals as an opportunity to use modern technologies and were ready to pay any price - financial, social and environmental - for this. In 1992, Deng Xiaoping said during a visit to Inner Mongolia: “The Middle East has oil, and China has rare earth metals.”
Bayan-Obo mining area in western Inner Mongolia. 2010
DigitalGlobe / Getty Images
Fourthly, the extraction of rare earth metals causes serious damage to the environment. The most common method of extracting them is leaching using various harsh chemicals, including strong acids. This process, when used on a large scale, poisons the soil, water, and air.
The world's largest mine, the aforementioned Bayan-Obo mine in Inner Mongolia, is a prime example. The water, air, and soil there are full of toxic metals, acids, and radioactive isotopes. This poses not only environmental but also major social problems. Due to environmental standards in Western countries, such production has not developed for a long time. Only in recent years, with the advent of relatively clean technologies, have changes been observed in this area.
Why are agreements on metals important for negotiations?
The process of extracting and processing rare earth metals is very complex and costly. Therefore, their production in Russia or Ukraine in the short or medium term is unlikely to be feasible for the United States.
A large part of the mines in Ukraine are located in areas that remain under Russian control or within the reach of its artillery fire. Even if these areas are recaptured, the risks of developing mines in these areas without guarantees of long-term peace will be very high for investors.
Will the US government agree to invest in these projects? This is also a big question. If an accidental shell hits American facilities in the Kharkiv region, could Washington consider it a direct attack and respond? The US has been trying to avoid such dangerous situations in recent years.
Even if a long-term peace agreement is signed, the issues will remain unresolved. Mining rare earth metals requires a lot of energy, and Ukraine’s energy system is not enough for this. After three years of war with Russia, the country’s energy system was almost completely destroyed. This will further increase the costs of putting the mines into operation - since each plant would require a separate power plant.
In addition, the agreements under discussion do not include security guarantees for Ukraine from the US. Donald Trump has made it clear on this point: “I will not give any additional security guarantees. Let Europe do that.” This creates a situation where the US benefits from Ukraine’s resources, but Europe must bear the costs of protecting them.
The Russian project may seem easier in theory, but it also faces almost insurmountable problems.
The US could invest in Russian mines located further from the border, but this would raise the issue of transport infrastructure - these mines are located far from the main trade routes. There is also the problem of access to technologies - most of them are under sanctions. But the biggest obstacle is the problem of protecting property rights. Over the past two years, Russia has nationalized the assets of a number of foreign investors with almost no compensation.
The Kovdorsk iron ore mine quarry in Murmansk region
Lev Fedoseyev / TASS / Profimedia
In addition, Putin's proposal runs counter to the interests of Russia's most important partner - China. Given that China is playing a crucial role in stabilizing the Russian economy, it is very difficult to assume that Moscow will go against Beijing's interests.
Therefore, the likelihood of this deal happening is very low. The Trump administration is a unique phenomenon in the US political system, and the next president will try to reconsider its most controversial decisions. Even if such an agreement is reached with Russia, it will not last long and will be canceled.
So far, all the rare earth projects discussed in Moscow and Kiev seem to be designed solely to gain tactical advantage in negotiations. Even if official documents are signed, they will soon be forgotten. Real projects in this area can only be implemented if the Russia-Ukraine war ends with a lasting peace. And even then, this will not happen quickly.
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