Russia is preparing to join the rare earth party, here’s how

Russia aims to expand production of rare earths, but analysts say it has lagged and faces challenges in establishing itself in the lucrative global market.

Russian President Vladimir Putin last week ordered authorities to complete a roadmap “for the long-term development of mining and production of rare and rare earth metals” by December 1.

Moscow lags behind countries such as China in developing deposits of rare earth elements. Rare earth elements are primarily used to make high-strength magnets, which are essential components in high-tech and energy industries such as household appliances, electric vehicles, and wind turbines.

The global scramble for rare earths is well under way, and China’s dominance in the field is creating geopolitical tensions and vulnerability for industries dependent on critical minerals.

In its latest report, the United States Geological Survey (USGS) estimated that there are 110 million tons of mineral deposits worldwide. Of this, 44 million tons came from China, followed by Brazil (21 million tons), India, and Australia. Myanmar also has large reserves of heavy rare earths and is the largest supplier to China, but the amount of reserves is unknown.

Although Russia lags behind major countries, it ranks fifth in the world in known rare earth reserves, with an estimated total of 3.8 million tons, according to the USGS. This is more than the 1.9 million tons in the United States.

Despite this, Russia’s domestic production of rare earths is only 2,500 tons, or 0.64% of global production in 2024. Desperate to change that, the Russian government is preparing plans to make better use of its natural resources as supply chain concerns grow and demand for rare earths soars, particularly from the United States.

Those concerns came to the fore this year when China imposed limits on rare earth exports in response to U.S. trade tariffs. That was until U.S. President Donald Trump and Chinese President Xi Jinping agreed last month to reduce U.S. tariffs on fentanyl in exchange for China to suspend regulations for a year.

President Trump is also seeking to strike a deal with war-torn Ukraine that would give the United States access to rare earth mineral deposits, primarily in the country’s south and east, areas partially occupied by Russian forces, in exchange for continued war support. President Trump has also repeatedly expressed interest in Greenland, which is rich in rare earths and minerals.

Putin, aware that Trump is eager for such a deal, has tried to pique the White House’s interest by saying Russia is ready and willing to work with foreign partners on joint projects to extract and process its own rare earth metals.

“Russia, like China, has a very long history of mining rare metals, which is what they’ve been doing for a long time, but I think the scramble[to increase rare earth mining and production]puts them in a different position now. The US is competing for needs, the Russians are competing for opportunities,” Willis Thomas, principal consultant at CRU Group, told CNBC.

But Russia is certainly teasing its own rare earth deposits, with the Russian Ministry of Natural Resources announcing earlier this year that Russia has reserves of 15 rare earth metals totaling 28.5 million tons, far exceeding estimates by the U.S. Geological Survey.

However, questions remain regarding the amount of metal in demand and its quality. Analysts say this is information the Russian government is likely to keep closely guarded.

“It’s a little opaque, but from what we know about the publicly listed reserves, they tend to be a little lower quality. I think there are probably reserves that we don’t know about, reserves that are known in Russia, and probably reserves that no one knows about,” CRU’s Thomas said.

“The only reason to release the ‘ingredients’ of a geological deposit is to raise capital. And if you don’t need to raise capital from the public, you probably won’t release it to the public,” he added.

Another big question is whether Russia will seek business from China, its strong eastern ally, as Beijing looks for other sources of rare earth raw materials that it can process and export. Or whether Russia will look to the West, particularly the United States, for new investment, mining and processing partnerships.

As CRU’s Willis Thomas put it, “mining is the relatively easy part: processing and separating and selling on the downstream market” that has enabled China to dominate the rare earth market.

Russia is making significant efforts to develop economic relations and supply chains with China and could become a new supplier to China, which is increasingly importing rare earth raw materials for the processing stage of production from countries such as Myanmar, Malaysia and Laos. China uses its economies of scale to process about 69% of the world’s rare earth elements.

Given the deteriorating relationship between Presidents Trump and Putin and the continued war in Ukraine, the United States may not be very ready to explore a future partnership with Russia for the time being.

Meanwhile, President Trump reiterated last week that critical minerals are a key priority for his administration as he invited the leaders of five Central Asian countries, which are part of Russia’s backyard, to discuss the issue.

“One of the big things on our agenda is critical minerals,” President Trump said. “In recent weeks, my administration has forged agreements with allies and friends around the world to strengthen America’s economic security by expanding supply chains for critical minerals.”

Russia will explore all options as it prepares a “roadmap” for rare earth production.

Piyush Goel, critical metals analyst at CRU, told CNBC: “With the war going on in Ukraine, Western governments and risk consumers themselves may not be willing to buy from Russia, and Russia may not be able to capture any of the momentum that is building in the West along the supply chain.”

“[So]Russian producers are more connected to the Chinese supply chain, so they have to sell to China. So in the current situation there is no premium for Russian producers. Having said that, anything can happen in the future,” he said.

Goel said China has advanced smelting, processing and separation capabilities to produce rare earths, and Russia could take advantage of the fact that “Chinese deposits can eventually degrade and actually fill that gap, so it’s better to get in there.”