Russia’s Rare Earth Industry Faces Challenges in Achieving Self-Sufficiency

Russia must establish a full production chain for rare earth metals (REM) to achieve technological sovereignty, according to Andrey Trenin, head of the company developing the Afrikand deposit. The country remains heavily reliant on China for its REM supply, despite possessing significant reserves.

The topic of REM has gained attention due to the global deglobalization trend, particularly driven by U.S. trade policies. High-tech industries, including defense, aerospace, and electronics, rely on access to rare earth metals, a market largely dominated by China, which controls 60% of global production and over 90% of processing capacity.

Russia currently consumes approximately 2,500 tonnes of REM annually—less than 1% of global production—but nearly all of it comes from China as refined metals or finished products. Domestic REM production remains minimal due to high costs, with Russian REM costing $20 per kilogram to produce compared to $11.5 per kilogram in China. The small production scale further exacerbates this price gap.

A possible solution includes government subsidies of around $21.25 million annually to make domestic REM production competitive. This approach mirrors past efforts to support Russian agricultural machinery manufacturers, which helped them outcompete foreign producers.

One of Russia’s major REM projects is the Afrikand deposit, which contains titanium, niobium, tantalum, and rare earth elements. The site is being developed by Arkmineral Resources, which aims to construct a mining and processing plant, as well as a chemical-metallurgical complex for titanium dioxide and rare earth oxide production.

Afrikanda was first explored in the mid-20th century, but high levels of radioactive thorium in the ore prevented full-scale development at the time. The current project seeks to overcome these challenges with modern processing technologies.

Despite having the necessary raw materials and technology, Russia lacks a vertically integrated REM production chain. Most domestic REM concentrate is exported, while finished products are imported. Establishing a complete supply chain—from mining to end-product manufacturing—remains a challenge due to weak domestic demand and global market competition.

Rosatom, which has been tasked with increasing Russia’s REM processing capacity, faces financial constraints and difficulties attracting investment. Industry experts argue that a dedicated government body is needed to coordinate policy, secure funding, and establish production targets.

The global rare earth market is valued at $16-20 billion and is expected to grow at an annual rate of 10% through 2030. China’s dominance in REM is attributed to decades of strategic investment and state support. Western nations, including the U.S., are now attempting to rebuild their rare earth supply chains to reduce dependence on China.

Russia faces similar challenges, as sanctions and trade restrictions limit access to foreign equipment and technology. Some industry leaders suggest forming partnerships with Southeast Asian countries, such as Myanmar and Vietnam, to co-develop processing facilities.