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These resources have never been more crucially needed in their unprocessed or polished forms. Like oil in the 20th century, critical minerals are the key sources of future economic development. They are being more recognized by governments and commercial enterprises, leading to an international “gold rush” for these critical minerals.
As of 2019, the world’s annual demand for rare-earth elements (a subset of “critical minerals”) is an expected level of about 360,000 tons per year by 2025. The deposits with commercially valuable quantities of REEs are less frequent, lowering the number of financially viable extraction operations. China has a stranglehold on downstream processing of REEs and other vital minerals; therefore, there is even less competition in this area. China accounts for 80% of the refined REE imports to the United States as of 2019. As a result of merging China Minmetals Rare Earth Co. with two other companies, a worldwide power in the strategic sector has been created.
Aside from China and COVID-related supply chain interruptions, demand for more environmentally responsible extraction techniques is becoming a new challenge for REE supplies. Environmental and political costs accompany the extraction of rare earth metals.
Environmental protest organizations are now questioning the techniques utilized to collect REEs. Indigenous peoples in the US and ethnic minorities in Africa — a hub of essential mineral extraction – are among those who are concerned about the loss of money and environmental effect.
Despite the increasing social and environmental consequences of mining in the West, Russia and China profit from the booming demand for minerals. Despite Russia’s estimated 12 million tons of REEs supply, China and Russia have opted to utilize political clout to gain mining contracts in Africa, where labor is cheap, and regulations are nonexistent. Russia has the 4th most extensive worldwide supply of REEs. Russian mercenaries are also making inroads in the region thanks to the Belt and Road Initiative. Russian private security firm Wagner has taken advantage of the volatile political climate in Africa to profit from the sale of minerals and mining activities. Wartime allies profit from rich mining contracts and unique diplomatic status due to the Wagner Group’s military operations.
China and Russia are engaged in a geopolitical arms race to extract and process rare earth elements (REEs) in northern and western Africa. The Belt and Road plan, which China has accelerated, is primarily to blame. Angola, Djibouti, Ethiopia, Kenya, and Zambia are critical or resource-rich nations where Chinese banks are lending the most money in Africa as of October 2021. Russia has chiefly utilized the Wagner Group to project electricity across the continent, with annual borrowing expected to reach $7.6 billion in 2019. Chinese mining projects, however, are not limited to the continent. In contrast to the United States, China has invested in Latin American natural resources.
Ningbo Zhoushan, one of China’s largest mining corporations, signed a lucrative agreement with Brazilian mining giant Vale to ship iron ore to China for processing in Brazil. In addition to Latin America, China and Russia have looked at the increasing potential in Eurasia, which is right in their backyards. By 2026, the Russian government has pledged to spend over $1.5 billion in domestic mining projects to become a significant REE exporter by that time. The Chinese approach to Eurasia differs somewhat in that they have concentrated their efforts on Mongolia, where mining firms have made large investments. Like hydrocarbon extraction, REE mining has become a hot-button topic in the United States. There must be sensitivity to the potentially catastrophic effects of such mining operations both at home and abroad among Western political and commercial sector leaders.
Additionally, the West must open its natural resources up to innovative ways of extraction that are both ecologically friendly and economically viable. As with the US strategic petroleum reserve (SPR), developing national strategic essential mineral reserves in supply shortages should be a priority. Research into alternative and recycled mining methods must also be undertaken. Identifying rare earth resources in regions less likely to create significant economic repercussions, such as the seabed and even in outer space, will be critical for the latter. Indeed, the prospect of mining asteroids as an alternative to obtaining rare earth elements has attracted the attention of major geopolitical powers. Iron, nickel, and platinum might all be mined from asteroids. Mining on Earth would be less harmful to the ecosystem and reduce climate change worries. Despite the high cost, these missions are part of future space development plans for Russia, China, and the United States.
It’s hard to deny the significance of essential minerals in terms of the coming energy transition and future economic development. It will have far-reaching geopolitical, environmental, and social implications on how nations and private companies decide to guarantee access to these resources in an environmentally sound, affordable, and reliable way.