Leveraging Central Asia’s Rare Earth Elements for Economic Growth

December 2023 | Wilder Alejandro Sanchez, Ariel Cohen, and Wesley Alexander Hill |Read the report here.


The global energy transition has underscored the vital importance to advanced economies of rare earth elements (REEs), the 17 minerals with broad and, to this point, irreplaceable uses in a wide variety of high technology, green energy, and defense industries. As the uses for these minerals has expanded, so too has global competition for them in a time of sharply increasing geostrategic and geoeconomic tension. Advanced economies with secure, reliable access to REEs enjoy economic advantages in manufacturing and corresponding economic disadvantages accrue for those without this access. China’s current dominance of both mining and, importantly, processing of REEs poses challenges for Western and other companies seeking to continue leadership in the global energy transition and other high technology industries. This report therefore features an increasingly attractive opportunity in the global market for REEs, analyzing the abundance of many of these materials in Central Asia. It has a particular focus on Kazakhstan, the region’s leading economy and holder of the largest reserves of REEs in the region. Kazakhstan also holds the world’s largest chromium reserves and the second largest reserves of uranium, as well as a very strong position in many other mining and extractive industries. The need for reliable supplies of REEs reaffirms the importance of ties with these countries, and in particular with Kazakhstan, not only in securing REEs for Western markets but in building closer geopolitical ties. While recent diplomatic initiatives are encouraging, more must be done to build deeper and more sustainable ties with those countries — and to encourage further economic partnership and integration among them, strengthening their collective impact on the global stage. Further, the report recommends reforms Central Asian countries can take to expand their global share of REE mining and processing, including greater transparency of data and access, steps towards limiting the environmental impact of REE mining through new extracting and processing technologies, diversifying the customer base, building stronger transportation links, and encouraging foreign investment. Looking beyond the region for foreign investment will both signal Central Asia’s openness to global markets and help safeguard Central Asian countries’ sovereignty and economic progress. What has been termed “soft infrastructure” — tax, trade, and regulatory polices — is essential to attract foreign investment. By establishing a strong investment climate, nations can unleash private capital for sustainable economic growth. Using market signals, rather than simply relying on subsidies, to encourage private investments in critical minerals for the energy transition will best ensure both a just transition and strong US leadership in that transition. While the report offers steps Central Asian nations to take advantage of this increasingly important global market, its call to action applies with equal force to nations outside the region, not least the United States, to recognize the importance of Central Asia to this highly significant global market and act with urgency to build the ties that will ensure the US and Western countries have access to REEs in a highly competitive global market. The report aims to spur action to seize this unique opportunity.