Ore reserves: The EU is losing in the race for rare earths

The European Union will not be able to achieve sovereignty in the extraction and processing of rare earth metals by 2030. Currently, Brussels is acting as a catch-up in this area, Ruslan Dimukhamedov, chairman of the Association of Producers and Consumers of Rare and Rare Earth Metals, told Izvestia. The European Union is completely dependent on imports from China. Ukraine can theoretically provide 21 out of 30 critically important minerals, but the country's reserves are likely to be overestimated, and it takes a long time to extract them, experts say. Why the topic of rare materials is becoming so relevant and what opportunities are opening up for Russia — in the Izvestia article.

What deal did Brussels offer Ukraine

The EU has offered Kiev to conclude an agreement on "critically important materials," European Commissioner for Industrial Strategy Stephane Sejournay said. He noted that Ukraine "can provide the EU with 21 of the 30 most important materials," while the deal will be beneficial for Kiev itself.

There are different approaches to studying rare chemicals. Because of this, the list differs slightly from one scientist to another. As a rule, groups of dispersed, light, refractory, radioactive and rare-earth elements are called rare. The first four are lithium, rubidium, caesium, beryllium, indium, gallium, germanium, zirconium, hafnium, vanadium, niobium, tantalum, and rhenium. The Ministry of Natural Resources and Environment, referring to the classifier of rare metals, also includes scandium. But many scientists include it and yttrium in the group of 17 rare earth metals. This list also includes samarium, lutetium, dysprosium, holmium, erbium, praseodymium, thulium, lanthanum, cerium, ytterbium, terbium, neodymium, gadolinium, europium, promethium. Their peculiarity is that they are mined only together, in one ore, and then they can be separated into separate components.

Rare earth metals (REM) are indispensable in high-tech sectors of the economy. In particular, they are needed for the production of smartphones, electric vehicle batteries, solar panels, and defense industry equipment, including drones. According to calculations by Verified Market Research, the REM market will grow by 11% per year and may reach $10.78 billion by 2030.

In 2024, the EU adopted a law on critical raw materials, according to which by 2030, at least 10% of the annual consumption of the European Union should be extracted within the union, and at least 40% should be processed. Currently, Brussels is completely dependent on imports from China for this issue, but it is trying to find new sources of supplies.

The main problem of the European industry is that it consumes finished products made of rare earth metals, rather than primary compounds. In particular, this applies to the automotive industry, with Chinese electric vehicles displacing European ones from all markets, Ruslan Dimukhamedov, chairman of the Association of Producers and Consumers of Rare and Rare Earth Metals, told Izvestia.

— Europe, of course, is now playing the role of catching up. If the automotive or aviation industry still exists there as a consumer of rare earth metal end products, then intermediate conversions have been lost," he noted.

At the same time, Europe has its own historical experience in the field of production of rare earth metals. For example, the French company Rhodia is one of the luminaries that owned a fairly complete chain of REM processing, up to high—tech compounds of materials. Therefore, the EU can restore intermediate processing of rare earth metals, but this requires money and state support for producers. The European economy, operating under WTO rules, does not have sufficient mechanisms to protect against cheaper imports, Dimukhamedov stressed.

— Europe also has its own sources of rare earth metals, although they are quite difficult to master. The well—known Norra Kar deposit is located in Sweden, an analog of our Russian Lovozero loparite ore deposit," he added.

Ukrainian deposits are important for the EU, as the Europeans have not had very successful projects with Africa and China. That's why they decided to find a "colony" closer, Dmitry Gusev, Deputy Chairman of the Supervisory Board of the Reliable Partner Association, told Izvestia.

The European Union will lose the race for rare earth metals regardless of the terms of the Ukraine deal, Dmitry Tortev, a member of the expert council of the State Duma Energy Committee, tells Izvestia.

— What the European Union can currently oppose in the rare earth metals market is the recently discovered carbonatite complex in Norway containing neodymium and praseodymium, which are used in the production of electric vehicles and wind turbines. But, as you know, this deposit will not take out all European production. There is another large deposit in Lapland. But both will start mining no earlier than in six to seven years," he continued.

It is unlikely that the EU will be able to achieve its goals of increasing the share of its own production and processing by 2030. There are not so many large and easily accessible deposits in it, not to mention the capacity for processing raw materials. And even if the Jews receive some volumes from Ukraine, they will not help the EU, industrial expert Leonid Khazanov told Izvestia.

How the EU and the USA compete for Ukraine's minerals

The increased activity of Brussels is caused by the actions of Washington, which is trying to compensate for the funds spent on supporting Ukraine through access to its resources. In February, the head of the US Treasury, Scott Bessent, brought to Kiev a draft agreement on access to rare earth metals worth $ 500 billion. However, the signing did not take place, Zelensky refused to approve the agreement at a meeting with US Vice President Jay Dee Vance at the Munich Security Conference. In response, US President Donald Trump attacked Zelensky.

According to the Financial Times newspaper, Ukraine nevertheless agreed to the deal, Zelensky expects to come to Washington to sign it. The agreement, according to the FT, provides for the creation of a fund to which Ukraine will transfer 50% of the proceeds from the future monetization of state-owned minerals, including oil and gas. It is noted that the final version of the agreement does not contain any mention of security guarantees from the American side.

At the same time, it is not yet clear whether when talking about rare earth metals, the United States means only them or all critically important materials. The head of the office of the President of Ukraine, Andriy Ermak, said that Kiev could provide lithium, uranium, titanium and other resources. It is important that in 2022, Russia included regions with $12.4 trillion in mineral reserves, The Washington Post wrote. In particular, two of the four lithium deposits came under Russian control.

The United States is heavily dependent on imports of rare earth metals from China: they themselves produce only 45 thousand tons per year. Since the United States has a difficult relationship with China, Washington is looking for alternative options. In particular, the United States is encouraging the development of deposits on its territory, but such projects have been implemented for a long time, Khazanov said.

— There are no large reserves of rare earth metals in Ukraine. For example, there is scandium in several deposits, but it can only be extracted along the way. In order to involve any field in development, it is necessary to carry out additional exploration, recalculate reserves, make a development project and attract financing, all this takes a long time," the expert noted.

Currently, China is the key producer of REM in the world, it produces 270 thousand tons per year with a global production of 390 thousand tons. Major suppliers of rare earth metals also include Australia and Myanmar, Leonid Khazanov said. Russia is also of interest to the United States because it has huge reserves of such minerals. Moreover, if we start developing deposits in Siberia today, the Russian Federation can greatly change the situation on international markets, Dmitry Tortev believes.

The EU found itself in a difficult situation because it had previously soured relations with Russia, depriving itself of the opportunity to cooperate in the extraction of critical resources. Amid the growing competition between the United States and China, Brussels is forced to reduce relations with Beijing. It is unlikely that Europe will have the political will to develop relations with China, including on the issue of resources, Vladimir Shapovalov, deputy director of the Institute of History and Politics at Moscow State University, told Izvestia. At the same time, Brussels' relations with Washington are also far from ideal. With the arrival of Donald Trump, both sides are threatening each other with the imposition of trade duties. Their positions on the Ukrainian crisis also differ: while the United States is in dialogue with Russia, the EU is imposing new sanctions against Moscow.

What opportunities do rare earth metalsoffer to Russia

Russia is ready to offer American government agencies and companies cooperation in projects for the extraction of rare earth metals, Russian President Vladimir Putin said on the evening of February 24.

— We certainly have an order of magnitude — I want to emphasize this — an order of magnitude more resources of this kind than in Ukraine. Russia is one of the undisputed leaders in reserves of these rare and rare-earth metals. We have them in the North, in Murmansk, in the Caucasus, in Kabardino—Balkaria, in the Far East, in the Irkutsk region, and in Yakutia, in Tuva," the president said.

The total reserves of all rare metals in Russia amount to 658 million tons, of which 28.5 million tons are rare earths, the Russian Ministry of Natural Resources reported. However, the share of our country's production in the world market does not exceed 1%, and there is practically no processing of such metals. At the same time, Russia may increase production of rare earth metals to meet European demand if political differences between the countries are resolved, Ruslan Dimukhamedov stressed.

The Russian Federation plans to reduce the share of REM imports by 2030 to 45% from the current about 75%, ensuring production at the level of 50 thousand tons per year, said earlier the head of the Ministry of Industry and Trade Anton Alikhanov. To do this, the authorities are discussing the provision of benefits to relevant projects, and the creation of 24 production chains is planned.

— Not only the Krasnoyarsk Territory is rich in rare Earth metals. They are also found in coal deposits in Kuzbass and Khakassia. After all, in fact, this is a stereotype that only coal can be mined, but in reality there are complex ore and coal deposits where unique compounds for aerospace technology, nuclear energy, communications, computerization and other important areas of industrial development and the country's defense capability can be extracted," Dmitry Tortev noted.

In order to increase the potential of the domestic industry in the field of new materials, the national technological leadership project "New Materials and Chemistry" was launched this year, said February 24 Vladimir Putin at a profile meeting. The national project will establish a full cycle of the rare and rare earth metals industry, ensure their extraction and processing, up to the production of finished high-tech goods with high added value. According to the results of the national project, the volume of output of such products should grow many times, the Russian president said.