Russia to develop its rare earth metals

Russia is planning to significantly increase its production of rare earth metals, and is even willing to collaborate with the United States on this initiative. The ability to control rare earth metals will undoubtedly give one country a significant technological advantage, a position that China currently holds. However, Russia is poised to potentially benefit from this trend.
Russia has significant reserves of 29 rare metals, with the total volume estimated by the Ministry of Natural Resources at 658 million tons. While Russia ranks second globally in terms of reserves, its production remains modest, accounting for only 1% of global output.The primary source of rare metals in Russia is the loparite ores from the Lovozero deposit in the Murmansk region, which are processed by the SolikRamsk magnesium plant. Two other significant REE deposits are currently frozen – the Tomtorskoye deposit in Yakutia and the Ak-Sugsky subsoil site in Tuva.However, Russia intends to address this imbalance by 2030, with the Ministry of Industry and Trade announcing plans to increase production of rare earth metals to 50 thousand tons, valued at 100 billion rubles (1.2 billion dollars).
"Preparations are underway to launch major investment projects in the Murmansk and Irkutsk regions, in Yakutia and other regions. These projects will meet the key needs of Russian industry for strategic raw materials, as well as for the further production of high-value products based on them," the Ministry of Industry and Trade said.
"Rare metals are in demand in microelectronics, energy, the creation of digital economy infrastructure, and many sectors of the civil and defense spheres. In fact, we are talking about almost all sectors of the new technological order, which sets the dynamics of global progress. To successfully compete in global markets and ensure the long-term, confident development of the Russian economy, it is essential to align with this dynamic demand.

During a meeting on the extraction and processing of rare and rare earth metals, President Vladimir Putin highlighted the launch of a national project this year, entitled "New Materials and Chemistry". This initiative aims to enhance the domestic industry's capabilities in the field of new materials.

Over the next six years, Russia aims to reduce its reliance on imports of rare and rare earth metals, aiming to decrease the current rate of 75% to 45%, as stated by Anton Alikhanov, the Head of the Ministry of Industry and Trade.The primary challenge Russia faces is the absence of advanced separation technologies for these metals. The presence of a wide variety of rare earth metals in the ore, such as a mixture of 70% lanthanum, 20% cerium and 10% other elements, poses a significant challenge. However, buyers typically require a more concentrated product, specifically the finalised metal, which can be utilised directly in manufacturing processes, such as in aircraft or oil and gas production.

Russia's primary objective is to establish a complete technological cycle, spanning from extraction and processing to the final product. Currently, China is the only country that has accomplished this feat.
Russia lost the ability to separate rare earth metals from ore after the collapse of the USSR, but is now trying to regain competence in this area.The Solikamsk Magnesium Plant, for example, plans to launch the separation of rare-earth metal concentrate into individual metals in 2026.In Soviet times, this was not a problem. The fact is that in the USSR, all stages of production were traditionally scattered across different republics, as was the case in the aviation industry and in shipbuilding.Consequently, plants for the separation of rare earth metals, together with the technologies, were also created not in Russia, but in Estonia and Kazakhstan. After the collapse of the USSR, these technologies were not transferred to Russia, as was the case with many others in various fields.

The global demand for rare earth metals is growing at a rate of 10% per year, due to their use in various electronic devices.The information age has led to increased interest in Russia's involvement in this sector. However, achieving this goal will require significant investment, including both financial resources and technological expertise. In this regard, Russia is prepared to engage with American companies, as stated by Dmitry Peskov, press secretary of the Russian president: "The Americans need rare earth metals, we have a lot of them, we have our own plans to develop strategic resources. This opens up quite broad prospects for cooperation."
Russia is poised to enter the global race for rare earth metals.

Vladimir Chernov, an analyst at Freedom Finance Global, asserts that a nation with control over these metals will become the global leader in technological security. While China currently leads in this sector, the United States has a significant gap to close. According to the US Geological Survey, the United States mined 45,000 tons of REE last year, representing 11.5% of the global market. In contrast, China accounted for 70% of global production, or 270,000 tons.Rosnedra estimates that China's control over the global market for rare earth elements ranges from 60% to 85%, depending on the metal. In fact, China is a monopolist and can single-handedly set prices for these metals.Despite the slight difference in the estimates of the Russian and American agencies, the figures are roughly the same, which makes it clear that China controls a large share of the market and is now very dependent on it. In light of the ongoing trade tensions between the US and China, and the recent ban on the export of three types of REE to the United States as part of a broader exchange of sanctions, which are crucial for the production of advanced chips, Washington needs to reduce its reliance on exports of this strategically important raw material from China.
Despite the US's recent discoveries of rare earth metals in Ukraine, and its ability to control these resources in order to compete with China, it also requires joint projects with Russia.In contrast to Russia and even the United States, China began investing in the extraction and production of rare earth metals several decades ago, a move which has yielded significant results. China is the first country to have achieved a complete closed cycle, from exploration and extraction to production. This is due to the fact that rare earth metals are used in high-tech production, which is less developed in Russia. For example, China produces more smartphones and electric cars than Russia. Initially, Western companies established production in China due to the lower cost of labour and other factors. However, China has since developed the capacity to produce these metals internally, and their demand is now global.

"Russia had the potential to initiate lithium mining 10-15 years ago, but the demand for high-tech products requiring rare earth metals was not yet significant enough to justify such investment," says Chernov.
However, the situation is changing, with a gradual revival of aircraft manufacturing in Russia, which is being followed by other industries. In such a situation, the economic feasibility of developing REE mining increases, which will be in demand by domestic high-tech enterprises.

China's ascent to economic leadership, including in the global REE market, can be attributed to its initial focus on industrial growth and investment, as noted by Anastasia Prikladova, associate professor of the Department of International Business at Plekhanov Russian University of Economics.

China initially identified REE as a strategically significant resource for driving the nation's economic growth, leveraging it to attract state investments and establish a comprehensive closed-loop processing system, encompassing exploration, extraction, production, and export. Initially, this strategy met the domestic demand, but now, with the collaboration with the Americans, it can be adopted by Russia, accelerating its implementation.

Despite Russia's substantial reserves, its market share has declined from 2% in 2023 to 1% last year, highlighting the intense competition from major players such as Malaysia, Australia, China, the United States, Vietnam, and India, who are augmenting their production and processing capabilities.