After the COP28 climate summit, the world cautiously celebrated the “beginning of the end” of the fossil fuel era. But many are starting to worry about the emerging contest over the critical minerals essential for this green future. Surging demand for chromium, copper, germanium, lithium and uranium — core components for batteries, wind farms, nuclear plants and electric vehicles — will force the U.S. and its allies to reckon with China, a near monopolist on their production, refinement and distribution.
The International Energy Agency estimates that there will need to be a quadrupling of mineral requirements for clean energy technologies by 2040 in order to achieve the 2°C goal of the Paris Agreement. Demand for nickel and cobalt should rise by 60-70 percent. Copper and rare earth elements are expected to see a 40 percent increase in demand. Demand for uranium could double by 2040.
The dominance of China and Russia in this sector is formidable. China controls a staggering 60 percent of worldwide production and 85 percent of processing capacity. It refines 70 percent of the world’s cobalt, 58 percent of lithium and 35 percent of nickel, all of which are used in batteries for electric vehicles. Russia controlled 43 percent of the palladium market in 2020 and a quarter of vanadium production. Palladium is used in catalytic converters and vanadium in batteries.
The United States is far behind and remains heavily reliant on imports for more than half of its critical mineral needs. Of these, the U.S. imports nearly three-quarters of its rare earth compounds and metals from China. Washington is aware of the national security dilemmas this poses. It has pursued cooperation with allies to secure supply chains and attempted to bolster domestic production. The Biden administration launched the Partnership for Global Infrastructure and Investment (PGII) and signed the Minerals Security Partnership to produce and process critical minerals with its G7 allies in June 2022. In August, the Department of Energy announced a $30 million fund to help lower the costs of onshore production. But both policies cannot meet rising U.S. demand for critical minerals.
Central Asia offers an opportunity to challenge China’s monopoly and rebalance international supplies. The region holds 38.6 percent of global manganese ore reserves, 30.07 percent of chromium, 20 percent of lead, 12.6 percent of zinc, 8.7 percent of titanium, as well as significant reserves of other critical materials. Kazakhstan is the world’s largest supplier of uranium, with 43 percent of world supply in 2022.With the U.S. House of Representatives passing a bill that would ban imports of Russian uranium in December 2023, as well as increasing interest around the world in nuclear energy in efforts to decarbonize, Kazakhstan is in the spotlight.
In his meeting with the five Central Asian presidents in September 2023, Biden proposed the creation of a C5+1 Critical Minerals Dialogue to develop Central Asia’s vast mineral wealth and advance critical minerals security. At present it is unclear what this dialogue will do. But ideally it could serve as a platform for government and private sector stakeholders to build partnerships that will provide benefits to both sides, while ensuring investments provide value to the local communities.
China has a significant head start on the United States, however. It is the main destination for most of the region’s critical minerals. For example, imports of molybdenum, which is used in the production of wind turbines, from Kazakhstan to China quadrupled between 2017 and 2020. Kazakhstan became the second-largest exporter of chromium to China after South Africa in 2019. Chinese companies own the majority of licenses for the extraction of critical minerals in Tajikistan and Kyrgyzstan. The region’s proximity to China and the lack of other external investors mean that exports to China look set to increase.
Investing in Central Asia’s mining and processing capabilities could significantly de-risk the world’s clean energy supply chain. To be effective, the U.S. needs to move beyond financial investment to include technology transfers and expertise. Increased cooperation with the U.S. Geological Survey, for example, could help authorities in the region better understand the resources at their disposal and how best to utilize them. The U.S. should establish a sustainable partnership that ensures the benefits of mineral wealth translate into broader economic growth and stability for the region. Critical minerals are already starting to compete with hydrocarbons as the region’s most-valuable export, with sales of Kazakh copper bringing in more revenue than natural gas in 2020 for the first time. In Tajikistan, critical minerals accounted for 37 percent of exports in 2019, consisting of aluminum, zinc, and lead. Uzbekistan and Kyrgyzstan have both seen the sector surpass 10 percent of their total exports.
This reset in relations around critical minerals would also align with broader U.S. strategic interests in the region. It offers a genuine counterbalance to the growing influence of both Russia and China, ensuring a more multi-polar regional order. Total Chinese investments in the region ballooned from $40 billion 2020, to over $70 billion in 2022, making it the largest economic actor in the region. Russia, which accounted for 80 percent of the region’s trade in the 1990s, now accounts for less than two-thirds of Beijing’s trade. Lurking beneath these big numbers is a growing asymmetry, particularly between China and the countries of the region. In 2020, an estimated 45 percent of Kyrgyzstan’s external debt, and 52 percent of Tajikistan’s was owed to China. Meanwhile, 75 percent of Turkmenistan’s exports depend on Chinese consumers. U.S. engagement should be multifaceted, encompassing diplomatic outreach, economic ties, and infrastructural development that weaves the region into the global economic fabric and weakens regional dependence on Russia and China.
However, this approach is not without its challenges. The U.S. will have to navigate a complex geopolitical terrain, dealing with a potentially restive Afghanistan, as well as intra regional border skirmishes and political instability. The region’s human rights record continues to worsen. In 2022, government forces in Kazakhstan, Uzbekistan, and Tajikistan massacred hundreds of protesters between them.
But after three decades of independence, America’s strategy toward the region needs a reboot. The shift from hydrocarbons to minerals offers a chance to reset the region’s economy away from the opaque governance, corruption, and state violence that oil and gas have fueled. The U.S. and its allies should work to wean the region off hydrocarbons and toward mineral extraction practices that respect Central Asia’s ecological riches and support the well-being of its inhabitants. Engaging with Central Asia is not only an option, but a necessity for breaking China’s monopoly on future technology production and securing a greener, more equitable future.
Edward Lemon is research assistant professor at the Bush School of Government and Public Service, Texas A&M University and president of the Oxus Society for Central Asian Affairs. Bradley Jardineis managing director of the Oxus Society for Central Asian Affairs.