The deal being finalised between the US and Ukraine has placed a spotlight on a suddenly much-sought after group of minerals – rare earth elements. This set of 17 nearly indistinguishable soft metals are essential to many modern digital technologies, such as advanced defence equipment as well as the magnets used in electric vehicle motors and wind turbines – all at the forefront of the global agenda. 

Despite their name, rare earth elements are in fact relatively abundant. But they rarely exist in their pure form and are often found with other minerals, making extraction difficult. Mining and processing them requires vast amounts of toxic chemicals, which is costly and poses environmental risks. 

China – by far the world’s largest producer – boasts the most sizeable known reserves, with Australia, Brazil and India also holding significant deposits, according to the US Geological Survey’s latest assessment. 

Propelled by the expansion of clean energy technologies, demand for rare earths is surging. Adamas Intelligence, a research company providing information on supply chains for critical minerals, forecasts the value of global consumption of the four rare earth elements used to make magnets – neodymium, dysprosium, terbium and samarium – to rise five-fold by 2030 and predicts significant growth after that. A global hike in defence spending could also drive consumption.  

In this context, securing supplies of rare earths has become a key issue for national security and geostrategic interests. This is compounded by the concentration of the supply chain in China, which mines around 60 per cent of rare earths globally, far ahead of other relatively large producers such as Australia, Myanmar and the US. China also refines about 90 per cent of global supplies – a quasi-monopoly.

In response, the West has been attempting to build out alternative supply chains to reduce its near complete reliance on China. ‘The Chinese have cornered the market on rare earths. It’s become evident that if Western countries don’t start securing a supply of them, they’re going to be beholden to China,’ says Darrell Podowski, Co-Chair of the IBA Mining Law Committee. ‘The US should have been focused on it years ago. It takes seven to ten years to get a mine going. It’s a slow burn.’ 

Since returning to the White House, US President Donald Trump has been bullish about acquiring supplies from other countries, making access to Ukraine’s rare earths a condition of ongoing US support to the embattled nation in its war with Russia.  

Details of a mooted minerals deal are yet to be fully agreed, but it’s expected to allow US access to Ukraine’s minerals and ensure part of the profits from future resource developments are invested in the country’s recovery. 

But the amount and value of Ukraine’s rare earths reserves are uncertain and those that exist could be out of reach. The last geological mapping dates back to Soviet-era exploration half a century ago. Of four mapped rare earths deposits, all but one are located close to or in areas under Russian control, according to Erik Jonsson, senior geologist at the Geological Survey of Sweden.

Analysts agree it’s unclear if Ukraine’s rare earths are commercially viable to mine, while exploration would require huge investments from private companies. For Podowski, who’s also a partner in the Securities and Mining Groups at Cassels in Vancouver, Ukraine’s minerals are ‘secondary’ to the US objective of securing peace. Noting that ‘Ukraine has never been a mining jurisdiction,’ he says that when President Trump talks about critical minerals, it’s ‘sort of a side interest.’ 

Others have seen in the President’s suggestions that he will acquire Greenland and Canada, both of which have considerable reserves of rare earths and other minerals, as another attempt to shore up US supplies. 

But Greenland’s 1.5 million metric tons of rare earths ‘are underneath a very thick cap of ice, which makes them uneconomical [to mine]’ and would come at great environmental cost, says Carlos Vilhena, Secretary of the IBA Energy, Environment, Natural Resources and Infrastructure Law Section (SEERIL). US interest could be part of efforts to prevent China from accessing the resources through Russia, putting a wedge between the two countries as part of a broader geopolitical play, adds Vilhena. 

Meanwhile, under its Critical Raw Materials Act, the EU is relying on building a high degree of self-sufficiency and partnerships with resource-rich countries to help break its dependence on China. The legislation identifies reusing and recycling magnets as a priority for increasing rare earths supplies. It’s a tall order given that only around one per cent of rare earths are currently recycled from old products.

Schröder says there are many challenges to creating a circular economy at scale for rare earths metals, but it’s ‘essential’ to build European supplies and reduce the environmental and social impacts from mining. 

Image credit: Anastasiia/adobestock.com