Tapping into Kazakhstan’s rare earths potential

Kazakh President Kassym-Jomart Tokayev recently highlighted rare earths as the “new oil” for Kazakhstan’s economy. File photo: Sputnik, Kremlin Pool Photo via AP

As the world accelerates its transition to cleaner energy through cutting-edge technology, the demand for rare earths has increased globally. India, the third-largest carbon emitter, is pivoting to renewable energy and faces a growing need for rare earths. Despite being the fifth-largest holder of rare earth elements, India relies heavily on China for imports as it lacks advanced technologies for extraction. Amid supply chain disruptions and security concerns tied to China’s dominance in this sector, New Delhi is diversifying its sources through agreements with the U.S., Latin American, and African countries to mitigate dependency on China. In this context, Kazakhstan emerges as a promising and strategically closer alternative.

China’s monopoly

China accounts for over one-third of the global rare earths’ possession and around 70% of its production, with India sourcing around 60% of its imports from Beijing. This heavy reliance stems from India’s insufficient domestic production to meet the demands of critical sectors like electronics, defence, and clean energy.

However, China’s past actions of disrupting critical technology and mineral supply due to bilateral issues give rise to fears as it tries to exert control over the critical mineral industry. China’s monopoly in global and Indian rare earth demand leverages its position to dictate supply chain terms. China recently halted the supply of antimony, crucial for flame retardants, solar cells, batteries, and military gear, citing national security concerns. This move, along with a ban in December 2023 on critical technologies for extracting rare earths and producing magnets, reinforces China’s grip on the sector.

Meanwhile, reduced ore supplies from Russia — mainly antimony concentrates used in wind and solar energy production — have intensified China’s concerns as both the largest producer and consumer of rare earths. Russia’s invasion of Ukraine has further exposed the risks of concentrated supply chains, resulting in India and Western nations to seek sustainable, diversified alternatives.

Why Kazakhstan is important

In this context, Kazakhstan, a close ally of India, offers a viable alternative to meet India’s rare earth demands. Kazakhstan is among the richest sources of rare earths. With New Delhi’s increasing engagement with Astana through the ‘Connect Central Asia’ policy and connectivity initiatives such as the International North-South Transport Corridor, a rare earth partnership could unlock significant economic benefits for both nations. Kazakhstan holds 15 of the 17 known rare earth elements and, with advanced extraction technologies, could dent China’s dominance in this sector. Astana already has extraction agreements with Japan and Germany, while the U.S., South Korea, and the European Union have recently joined exploration and production deals to tap its rare earth reserves.

Kazakhstan’s extraction of rare earth elements like dysprosium is projected to grow significantly between 2024 and 2029. The country’s President Kassym-Jomart Tokayev recently highlighted rare earths as the “new oil” for Kazakhstan’s economy. The country hosts one of the world’s three full-cycle beryllium and scandium factories, crucial for telecommunications, and is among the four global manufacturers of tantalum and niobium, essential for nuclear reactors and clean energy. Astana is expanding its role in rare earth and strategic mineral production with investments in tungsten, battery materials, and magnets. Its vast mining potential in rare earth elements can complement India’s efforts in this sector. The Kazakh government is prioritising advanced technologies and partnerships to strengthen its presence in emerging fields like lithium and heat-resistant alloys. Additionally, Kazakh metallurgical plants extract bismuth, antimony, selenium, and tellurium, and use imported technologies to produce gallium from alumina and indium from polymetallic ores, all of which are essential for renewable energy production.

The way forward

India’s COP29 pledge to achieve 500 GW of renewable energy by 2030 highlights the importance of rare earth elements like dysprosium in advancing clean energy technologies. India lacks capacity across the rare earth supply chain but plans a 400% increase in mining output over the next decade.

India’s over-reliance on China and possible global shifts after the U.S. regime change underscore the need for diversification. India-Kazakhstan collaboration can enhance India’s resource security, reduce dependence on China, and support sustainability by procuring rare earth through domestic extraction and import sources through partners in closer proximity. Apart from India’s direct connectivity challenges with Kazakhstan, there is a lack of necessary extraction technologies in both countries. Nevertheless, the ‘India-Central Asia Rare Earths Forum’, proposed by National Security Adviser Ajit Doval during the second India-Central Asia Summit in Astana, aims to boost partnerships and private sector investment, potentially combating these challenges. It could facilitate bilateral training, joint mining ventures, shared geological data and expertise, sustainable extraction practices, and create a regional market to reduce reliance on China.

Ayushi Saini, Junior Research Fellow and a final year PhD candidate at JNU, specialising in Central Asia