Uzbekistan to Increase Rare-Earth Production

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^{Original article: John C. K. Daly, The Jamestown Foundation. Many thanks to The Jamestown Foundation's Eurasia Daily Monitor for their collaborative spirit.}

Executive Summary:

• Uzbekistan’s President Shavkat Mirziyoyev has emphasized the development of the country’s rare-earth mining sector as a primary goal of his government due to the country’s massive reserves.

• Uzbekistan has begun to work with the European Union, United States, and United Kingdom to develop strategic cooperation for the extraction of rare-earth elements.

• The success of Uzbekistan’s rare-earth industry may provide more options for avoiding overreliance on Russian reserves, but it is unclear how the bottleneck of Chinese processing capabilities will be circumvented.

On April 29, Uzbek President Shavkat Mirziyoyev held a meeting to discuss the country’s mining and metallurgical industry policies. The output of Uzbekistan’s domestic geological industry, as a result of government policies and the implementation of targeted programs, reached almost $11 billion in 2023. The Uzbek government has emphasized developing its rare-earth mining sector as a high priority, touting the country’s reserves and revising its legal and economic structures to make the country as alluring as possible for foreign direct investment (FDI). Earlier, on April 5, Uzbekistan and the European Union signed a memorandum of understanding to build a strategic partnership in developing sustainable value chains in the field of critical raw materials. EU Executive Vice-President and Commissioner for Trade Valdis Dombrovskis observed, “This agreement with resource-rich Uzbekistan will help the European Union to secure much-needed access to critical raw materials. It is part of our wider global outreach to work with partners on securing materials for the future. For Uzbekistan, this will deliver a major boost to its ambitions to economic diversification [and] develop its extractive industry in a sustainable and resilient manner.” Uzbekistan’s capitalization of its rich natural resources will help put the country higher on the global economic stage, exporting goods that are becoming ever more essential in the modern world.

Uzbekistan’s interest in rare-earth metals is longstanding. A 2018 study by the US Geological Survey identified 87 deposits of rare-earth elements and rare metals in Uzbekistan. Rare-earth elements (rare metals) are the name given to a large group of elements, including beryllium, lithium, gallium, indium, vanadium, germanium, titanium, tungsten, and molybdenum, as well as inert gasses. As they are almost never found in nature in the form of independent minerals and concentrated deposits, they are subsequently extracted from the ores or tailings of other metals or minerals in a technically complex and expensive process.

On April 25, 2019, the Almalyk Mining and Metallurgical Combine (AGMK) opened Central Asia’s first center for the study of rare-earth metals. The center was created with the support of South Korean advanced research institutes in Chirchiq on the site of the former Uzbek Combine of Refractory and Heat-Resistant Metals, which amalgamated with the AGMK in September 2016. According to Sung-il Yu, president of the Korea Institute of Industrial Technology, the new center is both the only of its kind in Central Asia and the best in the world in terms of technical equipment for rare-metal research. Establishment of the center was based on a November 2017 agreement between Uzbekistan and South Korea for joint activities in rare metals and an agreement between AGMK and the Korean Institute of Rare Metals on the establishment of a joint Uzbek-Korean scientific and technological center for rare metals and alloys.

Currently, most of Uzbekistan’s mineral production consists of precious and non-ferrous metals, though there is massive untapped potential for rare-earth element production. Over 30 different types of such minerals have been discovered in the country. Uzbekistan possesses vast reserves of mineral resources and critical metals, including gold, copper, tungsten, silver, and uranium. In April, Mirziyoyev accordingly ordered his government to develop jointly with foreign partners $500 million in projects to produce rare-earth metals.

Mirziyoyev’s press service reported that he noted it was essential to “expand the development of existing and explore new deposits of critical raw materials—lithium, graphite, indium, vanadium, and rhenium.” Mirziyoyev’s meeting about the country’s mining and metallurgical industry policies also discussed implementing a project to produce $300 million of goods in the new sphere of “powder metallurgy that had not existed in Uzbekistan before,” along with $100 million of supporting equipment and components. Coverage of the meeting stated that Uzbekistan had “reached an agreement with the European Union on critical raw materials recently. This will give greater access to this large market.” Beyond its rare-earth reserves, Uzbekistan is also estimated to have Central Asia’s second-largest copper, molybdenum, and gold reserves. Mirziyoyev has subsequently sought to locate FDI for his rare-earth elements initiative.

On May 2, at the Third Tashkent International Investment Forum, Mirziyoyev addressed over 2,500 foreign attendees from 93 countries. He outlined several specific proposals developed by his administration intended to strengthen the protection of investors’ rights, particularly the draft law “On Investments” developed in accordance with World Trade Organization’s rules and standards. Mirziyoyev focused on expanding mutually beneficial cooperation with foreign investors, stating the joint development of mineral resources as among the priorities for the mutually beneficial partnerships.

Mirziyoyev also noted the establishment of strategic cooperation with the European Union in the field of raw materials and announced the development of similar agreements with the United States and United Kingdom. He also invited leading companies, such as to partner in the deep processing of strategic raw materials and the creation of a value chain. As a further incentive to potential EU, US, and UK investors, Mirziyoyev said a law “On Subsoil” based on modern international experience was being drafted to create conditions that would provide solid, stable, and transparent legal framework to attract investors to be a part in the development of Uzbekistan’s rare-earth mining economy. He added, “I would like to especially thank the European Bank for Reconstruction and Development for its significant assistance in this work.”

Increasing Uzbekistan’s production of high-value materials fits into Mirziyoyev’s campaign promises made during his reelection campaign in June 2023. During the campaign, he promised to double Uzbekistan’s gross domestic product (GDP) to $160 billion by 2030 and “increase GDP per capita from its current $2,200 to $4,000.” Mining “strategic megaprojects” were included in Mirziyoyev’s promise to boost GDP, including three copper processing plants, a new copper smelter, and a copper refining complex. He stated, “We are mobilizing our capabilities to increase the production of copper … by three and a half times, gold by one and a half times, silver by three times, and uranium by three times.”

Uzbekistan faces competition in developing its rare-earth assets from neighboring Kazakhstan. President Kassym-Jomart Tokayev, in September 2023, in a message to the people of Kazakhstan, called rare and rare-earth metals the “new oil” and noted that the development of these deposits should become a priority for the country. “One of the [government’s] priority tasks should be the development of deposits of rare and rare-earth metals, which have essentially turned into the ‘new oil.’ … Countries that can realize their potential in this area will determine the course for technological progress worldwide.”

Uzbekistan’s and Kazakhstan’s respective rare-earth initiatives have a wider geopolitical element. Their success may provide additional options for tamping down overreliance on Russian reserves, but it remains unclear how the bottleneck of Chinese processing capabilities will be circumvented. Given the potential profits from entering the market and accruing influence in the European Union and elsewhere, both states may well feel it worthwhile to intensify their efforts, however much it might disrupt Beijing’s and Moscow’s positions.