EU must invest quickly in Kazakhstan’s rare earths production
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2024-11-28
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EU must invest quickly in Kazakhstan’s rare earths production, for green energy transition and global competition
This article is part of our special report EU-Kazakhstan relations: A strategic and economic evolution towards a regional and global role.Kazakhstan aims to expand its role in the global production of rare and rare earth metals, a sector that interests the European Union. To maximise the partnership, Europe must align its green energy diplomacy with Kazakhstan’s local needs.A government meeting led by Kazakh Prime Minister Oljas Bektenov on 13 November discussed strategies to strengthen Kazakhstan’s global market position, attract technology and investment, and integrate into new economic sectors.The country boasts world-class facilities for producing beryllium, scandium, tantalum, and niobium. Metallurgical plants produce and process critical metals like bismuth, antimony, selenium, gallium, and indium.Production of tungsten concentrate has already begun at the Boguty deposit, with a $350 million investment, while plans include developing tungsten ores, producing ammonium paratungstate, and creating a magnet production cluster.Manganese sulphate monohydrate production covers five per cent of the global market. Meanwhile, the country intends to focus on battery materials, permanent magnets, and heat-resistant alloys.Kazakhstan has planned to produce graphite concentrate at the Sarytogan deposit. The European Bank for Reconstruction and Development (EBRD) has invested €3 million in this deposit, its first direct equity investment in the graphite and critical raw materials sector in Central Asia.German and Korean entities are already exploring lithium deposits in East Kazakhstan, with plans to produce nickel-based heat-resistant alloys for jet engines using materials like rhenium and cobalt.Bektenov highlighted the potential of Kazakh companies in conducting geological exploration, including feasibility studies. This approach will help boost Kazakhstan’s share in global rare and rare earth metals production.The country has significant potential to supply critical minerals essential for the energy transition and the electric vehicle market, something the EU is increasingly interested in. This analysis highlights nine key export products, including established metals such as zinc, copper, lead, silver and aluminium.It also includes untapped resources such as lithium, with newly discovered deposits valued at $15.7 billion, and nickel, gold, and rare earth metals, with extensive reserves worth $46 trillion.In his recent visit to France, Kazakh President Kassym-Jomart Tokayev highlighted his country’s extensive deposits of rare earth materials like lithium, beryllium and tantalum, which are in demand in almost all high technology and green industries.As the global trade for critical raw materials is expected to rise by 2040, Tokayev said Kazakhstan could become a reliable supplier to the European Union industry. The Central Asian republic produces 19 of the key raw materials vital for the EU economy.In November 2022, the EU and Kazakhstan signed a Memorandum of Understanding on a strategic partnership on sustainable raw materials, batteries and renewable hydrogen value chains.In mid-October, the Cooperation Council between the EU and Kazakhstan held its twenty-first meeting, where both parties reinforced the ongoing cooperation in the area of critical raw materials.Aligning diplomacy with local needsThe International Energy Agency (IEA) describes Kazakhstan as a frontrunner in Central Asia for developing clean energy innovation policies, thanks to its natural resources. It also notes challenges and learnings during the past decade and areas where Kazakh policymakers might focus their attention in the future.A policy brief by Clingendael, the Netherlands Institute of International Relations, highlights critical raw materials and green hydrogen as two key areas of mutually beneficial cooperation.It encourages the EU to collaborate with Kazakhstan and ensure it benefits from value-added production rather than merely exporting raw materials. The bloc must also support Kazakhstan in developing a clean energy industry locally, contributing to domestic decarbonisation and socioeconomic growth.According to the brief, the EU should prioritise investments in Kazakhstan’s renewable energy sector while phasing out oil and gas projects to reduce security risks tied to fossil fuel dependency.By aligning its green energy diplomacy with Kazakhstan’s local needs, the bloc can foster a mutually beneficial relationship that supports both energy security and sustainable development, the paper concluded.But the EU must speed up its approach. Kazakhstan and the United States have already created a joint venture to carry out a geological exploration project at the Akbulak deposit in the Kostanay region. According to historical geological data, the deposit contains reserves of rare earth elements.As of 2024, Kazakhstan has identified 124 deposits of rare and rare earth metals. Only 37 of them have been explored. If Kazakhstan manages to harness all its potential, it might claim its spot among leading global producers and serve as a counterweight to Chinese dominance.Currently, China leads 60 per cent of the production and 90 per cent of the global processing. To reduce dependence on China’s near-monopoly, the EU should expand cooperation with potential markets such as Kazakhstan.
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