For years, Russia has sat on vast deposits of rare earth elements (REEs) and strategic rare-metals yet produced almost negligible volumes compared with global leaders. While other actors raced ahead in exploiting the minerals that power electric vehicles, wind turbines, advanced electronics and defence systems, Moscow remained largely idle. Now, spurred by growing global demand and geopolitical volatility in supply chains, Russia is moving to catch up — yet its tardy start brings layered challenges.
Russia’s reserves of rare earths, by official domestic reckoning, are far from trivial. The country’s Ministry for Natural Resources reports around 28.5 million tonnes of “rare earth metals” in its rare-metals category, and a broader 658 million tonnes of 29 types of rare metals overall. Domestically developed reserves ready for exploitation are often quoted at some 3.8 million tonnes, which positions Russia among the top five globally. However, actual output remains tiny — just around 2,500-2,600 metric tons in 2024, barely a fraction of global supply.
In other words: Russia has the hardware (the reserves) but not the engine (production and processing). By contrast, China dominates the market thanks to decades of investment in extraction, refining and downstream magnet manufacturing. Russia is effectively running to join a race it watched for years from the sidelines.
Why Russia fell behind
Several intertwined factors help explain why Russia is so late to making a serious push in rare earths.
First, for the longest time, Russia’s extractive strategy was heavily focused on hydrocarbons and other conventional mineral wealth, rather than the full chain of advanced materials. That meant less attention to building processing and separation capacity for REEs, which are often low-grade, complex and capital intensive to refine. Russia’s only substantial domestic plant that separates multiple rare earth oxides reportedly has an annual capacity of only about 200 tonnes. That simply cannot power a major international supply role.
Second, the technological and industrial ecosystem required to go from ore to high-purity REE oxides — and then into magnets and finished parts — remains underdeveloped in Russia. Mining raw minerals is one step; separating, refining, alloying and manufacturing finished products is another. Without the full value chain, Russia remains a supplier of low-value material rather than a true competitor to China’s integrated systems.
Third, geopolitical and economic constraints have weighed heavily. Western sanctions, reduced access to foreign technology and investment, and Russia’s war in Ukraine have added risk, raised financing and insurance costs, and deterred many global partners from entering projects. Russia’s energy-intensive refining requirement also clashes with the country’s ageing infrastructure and remote deposit locations such as in the Arctic and Siberia.
Last, the market context has shifted. China’s dominance, especially in processing (about 69 % of global REE processing capacity) means newcomers face a cost-disadvantage and must overcome entrenched supply chains. Russia therefore must build not just mines but entire processing hubs and markets — and fast.
What Russia is doing now
Despite the late start, Russia is moving. In early 2025 the government initiated a national “New Materials and Chemistry” project, tasked with accelerating extraction, processing and production of rare earth and rare-metals materials. One stated aim is to reduce Russia’s dependence on imported rare earth inputs: to cut the share of imports from about 75 % now to 45 % by 2030, and increase domestic production to some 50,000 tonnes annually.
The flagship project is the Tomtor deposit in Yakutia (Far East Russia) — regarded as the largest rare-earth deposit in the country. The oil company Rosneft took full control of its operator in mid-2025, signalling the state’s readiness to intervene and speed up development. Plans call for multibillion-dollar investment and ambitions to reach up to 12 % of global rare earths output by 2030. Russia has also courted foreign partners: in 2025 it entered talks with the United States about joint projects, signalling openness to integrate into broader supply chains and attract technology and capital.
Parallel initiatives include setting up industrial complexes specifically for magnetic-rare-earth metals, and efforts to deepen downstream capabilities so Russia does not remain merely an exporter of raw ore. The underlying logic is clear: as demand for high-strength magnets and battery-materials surges, Russia sees rare earths as a strategic lever for economic diversification and geopolitical leverage.
Why entry still looks fraught
Even as Russia presses ahead, entry into the global rare-earths fray will not be seamless. The first major hurdle is processing cost and competitiveness. Analysts estimate that the lowest-cost REE production globally can be under US $11 per kg of rare-earth oxide equivalent — a benchmark largely set by Chinese players benefiting from scale, cheap labour, lax environmental standards and integrated downstream manufacture. Countries without that scale and infrastructure face cost-disadvantages.
Russia’s remoteness of deposits, harsh terrain, energy-intensive operations, ageing factory base and limited downstream demand make competitiveness difficult. It also faces the “valley of death” between mining ore and producing finished magnets or alloys — without that transition, revenue remains low and the project economics weak.
Another issue is environmental regulation, permitting delays and community push-back. While Russia may face fewer regulatory constraints than some Western countries, the sheer technical complexity of rare-earth extraction and separation (with immense waste streams, specialised chemical processes, high water/energy use) means the risks are substantial.
Geopolitical and market access constraints also loom. Many of the most attractive customers and technology partners are Western actors reducing interdependence with Russia. Until the war in Ukraine is resolved and sanctions roll back, large Western offtake contracts may remain off the table. That leaves Russia more dependent on China for offtake or joint-venture terms — lowering margins and strategic optionality.
Finally, timing remains tight. The global race for rare earths is accelerating now. Many mines, processing hubs and supply-chain investments are already underway in Australia, the U.S., India and elsewhere. If Russia cannot scale quickly and competitively, it risks arriving too late to fully capture value, and may be relegated to a supplementary role.
How Russia might still win a role
Despite the impediments, Russia does carry natural advantages that — if leveraged well — can allow it to carve out a meaningful niche. Its large reserves give it optionality: even if only a portion of the 28.5 million tonnes is economically recoverable now, the sheer size allows for long-term planning. That positions Russia as a potential “swing supplier” in times of global supply disruptions.
Moreover, Russia’s strategic impetus is clear: rare earths are tied not just to conventional industry but to defence, advanced electronics and green-energy transitions. By elevating rare-earths as a “new materials” priority, Moscow signals intent to move beyond hydrocarbons and old-economy minerals.
If Russia partners with foreign firms — especially those with downstream technology — it can bypass some of the cost/disadvantage. For example, by exporting concentrate to a partner’s processing plant rather than building the full refining facility internally, Russia can monetise the raw asset quickly. Over time, it can build out domestic refining and value-added capacity.
In addition, Russia may benefit from China’s eventual exhaustion of its richest deposits or from disruptions in other regions. Analysts suggest that when China’s low-cost hard-rock mines start to deplete, newer supply entrants like Russia could fill the gap. If Russia times this correctly — and avoids major technical or costing setbacks — it can still ride the upward demand wave for REEs.
Finally, domestic policy alignment is improving: state corporations are being empowered, financing is being structured, tax/incentive regimes are being adjusted, and upstream projects are being fast-tracked. That alignment reduces project risk and signals to investors that Russia is serious.
Implications for global supply chains
Russia’s belated push into rare earths may reshape parts of the global critical-minerals map. For Western countries trying to reduce reliance on China, Russia offers both opportunity and complexity. On one hand, adding another supplier into the mix helps diversify. On the other, Russia’s geopolitical posture and sanctions footprint complicate straightforward offtake or partnerships.
China’s dominant role remains intact for now. But if Russia manages to scale even moderately by 2030 — say to 10-12 % of global production — the market balance could shift, giving Moscow more leverage over essentials such as electric-vehicle magnets, wind-turbine drives and defence-grade alloys. That would require not just extraction, but downstream supply-chain integration: refining, alloys, magnet manufacturing, and reliable logistics.
For technology-seeking investors, Russia presents a high-risk/high-opportunity scenario: high reserves but uncertain project execution. For buyers of rare earths, emerging Russian output could provide a hedge against over-dependence on China — but only if processing quality is high and supply chains are reliable.
In sum, Russia’s late entry does not preclude a meaningful role. But it must overcome structural, technological and geopolitical headwinds rapidly. Otherwise, it risks owning the ore but missing the manufacturing prize that determines value in the rare-earth era.
(Source:www.cnbc.com)
Russia’s reserves of rare earths, by official domestic reckoning, are far from trivial. The country’s Ministry for Natural Resources reports around 28.5 million tonnes of “rare earth metals” in its rare-metals category, and a broader 658 million tonnes of 29 types of rare metals overall. Domestically developed reserves ready for exploitation are often quoted at some 3.8 million tonnes, which positions Russia among the top five globally. However, actual output remains tiny — just around 2,500-2,600 metric tons in 2024, barely a fraction of global supply.
In other words: Russia has the hardware (the reserves) but not the engine (production and processing). By contrast, China dominates the market thanks to decades of investment in extraction, refining and downstream magnet manufacturing. Russia is effectively running to join a race it watched for years from the sidelines.
Why Russia fell behind
Several intertwined factors help explain why Russia is so late to making a serious push in rare earths.
First, for the longest time, Russia’s extractive strategy was heavily focused on hydrocarbons and other conventional mineral wealth, rather than the full chain of advanced materials. That meant less attention to building processing and separation capacity for REEs, which are often low-grade, complex and capital intensive to refine. Russia’s only substantial domestic plant that separates multiple rare earth oxides reportedly has an annual capacity of only about 200 tonnes. That simply cannot power a major international supply role.
Second, the technological and industrial ecosystem required to go from ore to high-purity REE oxides — and then into magnets and finished parts — remains underdeveloped in Russia. Mining raw minerals is one step; separating, refining, alloying and manufacturing finished products is another. Without the full value chain, Russia remains a supplier of low-value material rather than a true competitor to China’s integrated systems.
Third, geopolitical and economic constraints have weighed heavily. Western sanctions, reduced access to foreign technology and investment, and Russia’s war in Ukraine have added risk, raised financing and insurance costs, and deterred many global partners from entering projects. Russia’s energy-intensive refining requirement also clashes with the country’s ageing infrastructure and remote deposit locations such as in the Arctic and Siberia.
Last, the market context has shifted. China’s dominance, especially in processing (about 69 % of global REE processing capacity) means newcomers face a cost-disadvantage and must overcome entrenched supply chains. Russia therefore must build not just mines but entire processing hubs and markets — and fast.
What Russia is doing now
Despite the late start, Russia is moving. In early 2025 the government initiated a national “New Materials and Chemistry” project, tasked with accelerating extraction, processing and production of rare earth and rare-metals materials. One stated aim is to reduce Russia’s dependence on imported rare earth inputs: to cut the share of imports from about 75 % now to 45 % by 2030, and increase domestic production to some 50,000 tonnes annually.
The flagship project is the Tomtor deposit in Yakutia (Far East Russia) — regarded as the largest rare-earth deposit in the country. The oil company Rosneft took full control of its operator in mid-2025, signalling the state’s readiness to intervene and speed up development. Plans call for multibillion-dollar investment and ambitions to reach up to 12 % of global rare earths output by 2030. Russia has also courted foreign partners: in 2025 it entered talks with the United States about joint projects, signalling openness to integrate into broader supply chains and attract technology and capital.
Parallel initiatives include setting up industrial complexes specifically for magnetic-rare-earth metals, and efforts to deepen downstream capabilities so Russia does not remain merely an exporter of raw ore. The underlying logic is clear: as demand for high-strength magnets and battery-materials surges, Russia sees rare earths as a strategic lever for economic diversification and geopolitical leverage.
Why entry still looks fraught
Even as Russia presses ahead, entry into the global rare-earths fray will not be seamless. The first major hurdle is processing cost and competitiveness. Analysts estimate that the lowest-cost REE production globally can be under US $11 per kg of rare-earth oxide equivalent — a benchmark largely set by Chinese players benefiting from scale, cheap labour, lax environmental standards and integrated downstream manufacture. Countries without that scale and infrastructure face cost-disadvantages.
Russia’s remoteness of deposits, harsh terrain, energy-intensive operations, ageing factory base and limited downstream demand make competitiveness difficult. It also faces the “valley of death” between mining ore and producing finished magnets or alloys — without that transition, revenue remains low and the project economics weak.
Another issue is environmental regulation, permitting delays and community push-back. While Russia may face fewer regulatory constraints than some Western countries, the sheer technical complexity of rare-earth extraction and separation (with immense waste streams, specialised chemical processes, high water/energy use) means the risks are substantial.
Geopolitical and market access constraints also loom. Many of the most attractive customers and technology partners are Western actors reducing interdependence with Russia. Until the war in Ukraine is resolved and sanctions roll back, large Western offtake contracts may remain off the table. That leaves Russia more dependent on China for offtake or joint-venture terms — lowering margins and strategic optionality.
Finally, timing remains tight. The global race for rare earths is accelerating now. Many mines, processing hubs and supply-chain investments are already underway in Australia, the U.S., India and elsewhere. If Russia cannot scale quickly and competitively, it risks arriving too late to fully capture value, and may be relegated to a supplementary role.
How Russia might still win a role
Despite the impediments, Russia does carry natural advantages that — if leveraged well — can allow it to carve out a meaningful niche. Its large reserves give it optionality: even if only a portion of the 28.5 million tonnes is economically recoverable now, the sheer size allows for long-term planning. That positions Russia as a potential “swing supplier” in times of global supply disruptions.
Moreover, Russia’s strategic impetus is clear: rare earths are tied not just to conventional industry but to defence, advanced electronics and green-energy transitions. By elevating rare-earths as a “new materials” priority, Moscow signals intent to move beyond hydrocarbons and old-economy minerals.
If Russia partners with foreign firms — especially those with downstream technology — it can bypass some of the cost/disadvantage. For example, by exporting concentrate to a partner’s processing plant rather than building the full refining facility internally, Russia can monetise the raw asset quickly. Over time, it can build out domestic refining and value-added capacity.
In addition, Russia may benefit from China’s eventual exhaustion of its richest deposits or from disruptions in other regions. Analysts suggest that when China’s low-cost hard-rock mines start to deplete, newer supply entrants like Russia could fill the gap. If Russia times this correctly — and avoids major technical or costing setbacks — it can still ride the upward demand wave for REEs.
Finally, domestic policy alignment is improving: state corporations are being empowered, financing is being structured, tax/incentive regimes are being adjusted, and upstream projects are being fast-tracked. That alignment reduces project risk and signals to investors that Russia is serious.
Implications for global supply chains
Russia’s belated push into rare earths may reshape parts of the global critical-minerals map. For Western countries trying to reduce reliance on China, Russia offers both opportunity and complexity. On one hand, adding another supplier into the mix helps diversify. On the other, Russia’s geopolitical posture and sanctions footprint complicate straightforward offtake or partnerships.
China’s dominant role remains intact for now. But if Russia manages to scale even moderately by 2030 — say to 10-12 % of global production — the market balance could shift, giving Moscow more leverage over essentials such as electric-vehicle magnets, wind-turbine drives and defence-grade alloys. That would require not just extraction, but downstream supply-chain integration: refining, alloys, magnet manufacturing, and reliable logistics.
For technology-seeking investors, Russia presents a high-risk/high-opportunity scenario: high reserves but uncertain project execution. For buyers of rare earths, emerging Russian output could provide a hedge against over-dependence on China — but only if processing quality is high and supply chains are reliable.
In sum, Russia’s late entry does not preclude a meaningful role. But it must overcome structural, technological and geopolitical headwinds rapidly. Otherwise, it risks owning the ore but missing the manufacturing prize that determines value in the rare-earth era.
(Source:www.cnbc.com)
