On February 8, the U.S. Department of State hosted the inaugural meeting of the C5+1 Critical Minerals Dialogue (CMD) alongside senior officials from all five Central Asian countries. The event represented the first step in implementing the CMD, announced in September during President Biden’s historic summit during the UN General Assembly in New York with Central Asian heads of state. Representatives from all sides expressed an interest in exploring opportunities for U.S. investment in the mining and processing of critical minerals across the region. 

The CMD represents part of a broader U.S. strategy to counter China’s dominance over critical mineral supply chains. Minerals such as nickel, cobalt, palladium, and rare earth elements (REEs) are essential for high-tech industries and defense systems, and preserving reliable access to these materials has become integral to the economic and national security of major powers. Critical minerals are also essential to the green transition because minerals such as lithium, manganese, and chromium are vital components of renewable energy technologies. In September, Kazakhstan President Kassym-Jomart Tokayev described critical minerals as the “new oil.”

The U.S.’s Dependence on China

As the U.S.-China rivalry grows, the U.S.’s dependence on China for critical minerals becomes an ever larger strategic vulnerability. China is the undisputed leader in critical mineral supply chains, controlling nearly 60% of rare earth mining operations and more than 85% of global processing capacity. Should it choose to, China can use its near-monopoly on critical minerals to hamstring the U.S.’s high-tech industries and military-industrial capacities. Beijing has already revealed an interest in doing so, announcing export restrictions on several minerals and extraction and processing technologies in December. 

On February 14, U.S. Energy Secretary Jennifer Granholm told CNBC she is “very concerned” about China’s grip on the critical mineral supply chain. The Department of Defense has sought to alleviate the problem by onshoring production, issuing tens of millions of dollars in grants to firms building domestic critical mineral extraction and processing facilities. However, domestic supplies alone will never be enough to rival China’s level of extraction and refinement. Secretary Granholm said the U.S. will be “partnering with friends” to meet rising demand for critical minerals. 

The Geopolitics of the CMD

The Critical Mineral Dialogue is an indication that the United States wants to include the C5 countries amongst its friends. Central Asia sits on a veritable ocean of rare earth and other minerals, reportedly holding 38.6% of global manganese ore reserves, 30.07% of chromium, 20% of lead, 12.6% of zinc, 8.7% of titanium, and significant reserves of other materials. A 2018 USGS report showed 384 “occurrences” of REEs and rare metals across the five countries. The region’s critical minerals industry is growing with or without U.S. support: in 2020, Kazakhstan earned more revenue from copper than from natural gas exports for the first time. Since then, its copper industry has only continued to grow.

The CMD is also evidence of increased U.S. engagement with Central Asia, enabled by the region’s souring relations with Russia and wariness towards China. Russia’s invasion of Ukraine has caused trade and supply chain disruptions in Central Asia and weakened Russia militarily, economically, and geopolitically. Meanwhile, a decade of splashy, large-scale Chinese infrastructure projects has landed Central Asian countries in large debts without always delivering a useful or finished product. While both have existing relationships with Central Asian mining firms, neither Russia nor China has staked an inexorable interest in developing Central Asia’s critical minerals sector. 

History and geography mean the C5 countries will always maintain substantial economic relationships with Russia and China, but these ties do not preclude commercial relations with the West. Central Asian leaders have taken a pragmatic approach, balancing the influence of great powers to promote their development agendas. The Biden administration has been clear-eyed about Central Asia’s geostrategic realignment, seeing a window of opportunity to forge productive, mutually beneficial relations. The CMD emerged from these dynamics as an opportunity to develop Central Asia’s vast mineral wealth and help the U.S. break its dependence on China’s critical minerals. 

Moving Forward

While the CMD represents a productive first step, there is still much to do to capitalize on this window of opportunity. At the CMD’s first meeting this month, the United States emphasized financing opportunities via the Minerals Security Partnership (MSP) and the Partnership for Global Infrastructure and Investment (PGII). However, these initiatives will struggle to provide finance on the scale of China’s Belt and Road Initiative (BRI). The United States must find other ways to compete, such as by including technology transfer and technical assistance alongside its funds. The CPC’s 2022 policy brief recommends offering the services of the U.S. Geological Survey to help Central Asian countries utilize and profit from their critical mineral resources. The CMD should also seek to mobilize private finance by using its expertise to develop private investment opportunities and by facilitating interactions between U.S. and Central Asian firms. 

Conversely, Central Asian states need to build the physical and legal infrastructure to accommodate Western investment and technical assistance. The legal framework for foreign investment in critical minerals should be clear, well-publicized, and guided by the rule of law. Likewise, Central Asian countries must overcome their traditional secretiveness around natural resources because Western partners will need to access up-to-date, digitalized geological data. Transport routes that bypass Russia and China are another prerequisite for Western investment, and the development of the Middle Corridor will be essential in transporting Central Asia’s critical minerals to global markets. 

It is promising that the CMD met just months after it was announced, seeming to indicate that all involved are serious about scaling up Central Asia’s role in global critical mineral supply chains. However, the United States has yet to commit funds to the CMD or pledge any investments on its behalf. The initiative has the potential to catalyze public and private partnerships that develop Central Asia’s mineral resource base and, in doing so, reduce the U.S. dependence on China for technology production. But both sides must take proactive steps to ensure that increased engagement results in real investments. If talk translates into action, U.S. collaboration with Central Asia can foster a greener, more secure future for all involved.