Today’s global rare earths supply chain is lopsided, with only a few nations, helmed by China, firmly in control of production and processing. Now, rapidly unfolding developments involving the United States, Ukraine and Russia could introduce a new dimension to this otherwise highly imbalanced supply chain.
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Ukraine Rare Earths Deal on the Horizon
For some weeks now, a U.S. team led by President Donald Trump has been negotiating a high-value deal with the war-torn Ukraine administration led by President Volodymyr Zelensky. Trump calls the potential agreement “pay back” to Washington for military aid provided by the U.S. in the last three years since Russia’s invasion.
Still, many experts dispute the actual amount of U.S. aid provided. While Trump has put it at between US $350 billion and $500 billion on different occasions, Ukraine claims it to be about a hundred billion dollars. Nevertheless, the aid is central to the negotiation for access to Ukraine’s rare earths reserves.
However, Russia has suddenly and rather surprisingly jumped into the fray, queering the pitch by “offering” the U.S. ownership of portions of rare earths reserves its military controls in Ukraine territory. According to reports, Ukraine has about 5% of the global rare earth elements total reserves.
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Russian Pitch Also Up for Consideration
Russian President Vladimir Putin has discussed the potential for joint ventures with the U.S. on rare earths. Putin’s special envoy for investment and economic cooperation with foreign countries, Kirill Dmitriev, recently told CNN that Russia was open to cooperation on both rare earth and energy matters.
Russia has managed to wrest control of about 20% of Ukrainian land from eastern Donbas and Crimea, all of which hold a significant amount of Ukraine’s rare earth elements and other critical minerals. As per a CBS report, data provided by the Institute for the Study of War shows that about 50% of Ukraine’s REE deposits are now in Russian-occupied territory.
After a failed first attempt, the talks between the U.S. and Ukraine are reportedly coming to a climax soon. President Trump recently told the media about an estimated one trillion dollar deal that will likely be signed during Zelensky’s upcoming visit to Washington.
The Rare Earth Supply Chain: A Global Perspective
Because of these ongoing negotiations, the U.S. seems to be in a slightly stronger position than before regarding rare earth minerals. The current situation seems to ensure a win-win outcome regardless of whether Russia or Ukraine (or both) ultimately delivers.
Because China produces about 2/3rd of the world’s total rare earth supply and is also the world’s biggest processor of rare earths, Washington has been actively looking at other options. This is mainly due to the overwhelming importance of these metals, as well as minerals like gallium and titanium, for the automobile, defense and aerospace sectors, among others.
However, Ukraine does not actually produce rare earths, nor has it supplied any of late. In fact, experts have cast some doubts over ongoing efforts between that country and the U.S. to re-engineer the rare earth supply chain for several reasons, including the inability to access the Russia-captured regions of Ukraine.
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Moving Away From China
The group of 17 metals classified as “rare earths,” which includes dysprosium and neodymium, are in abundance below the earth’s surface. Last year, the United States Geological Survey estimated that there were about 110m MT of deposits spread around the world. Of this, about 44 MT was in China and another 22 MT was in Brazil, followed by 21 MT in Vietnam, 10 MT in Russia and about 7 MT in India.
Handling rare earths at the ground level means both production and processing. The reason why China currently leads in both areas is because few nations are willing to take on the hefty costs of mining rare earths and the accompanying environmental toll. This is because extracting them entails the heavy use of chemicals, resulting in toxic waste by-products.
Given the always-complicated state of U.S.-China relations, U.S. policymakers have always disliked the idea of allowing China to have such a concentration of production and processing abilities, which they see as posing risks to the global supply chain.
The U.S. Seems Destined to Diversify
For the U.S., the name of the game is diversification. The current moves involving Ukraine and potentially even Russia represent part of an overarching move to diversify sources and perhaps also increase the U.S.’ domestic processing capabilities. This is also why Trump began talking about “buying” Greenland immediately upon taking over as President. That country sits on some of the world’s largest deposits of rare earth metals, including neodymium, dysprosium, and scandium, to name a few.
Meanwhile, China tops the list of global production, accounting for about 69% of the world’s rare earth production in 2024. The U.S. comes in at a distant second with just 11.6%. Meanwhile, Myanmar another leading producer, contributing around 8% of global production.
For now, the world continues to watch how the U.S.-Ukraine deal pans out and whether or not the U.S. will take up Putin’s offer on rare earths. The latter is especially interesting given the U.S. recently voted alongside Russia against a resolution in the United Nations General Assembly condemning the latter for attacking Ukraine.
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