Central Asia emerges as key partner in global push to cut rare-earth dependence on China

As Central Asia draws global attention as a key partner in efforts to reduce dependence on China for critical minerals, South Korea should develop a cooperation model that leverages its manufacturing strengths, a new report recommends.

According to a report recently published by the Korea Institute for International Economic Policy titled "Trends in Major Countries' Critical Mineral Cooperation with Central Asia and Implications," Central Asia has emerged as the most promising alternative to China for reducing critical mineral reliance among leading nations.

Kim Gyeong-mi, a researcher at the institute's Center for World Regional Studies 2 and the report's author, identified the United States, the EU and Japan as the most active players in critical mineral cooperation, saying they share a common pattern of "elevating cooperation with Central Asian countries to the level of summit diplomacy, placing it as a key agenda item at leaders' meetings, and translating diplomatic rhetoric into concrete business investment."

The push to secure critical minerals has become a top priority for advanced economies after China began wielding rare earths as a diplomatic weapon. China effectively monopolizes the global rare-earth market, accounting for roughly 70 percent of world output — materials essential to semiconductors and other advanced industries. When the trade war with the United States intensified last year, China imposed export licensing requirements on seven heavy rare-earth elements. Kim said the move "starkly demonstrated that critical mineral supply can be used as a tool of geopolitical leverage."

Advanced manufacturing nations hit by China's export restrictions are competing to deepen ties with Central Asia, which holds large deposits of critical minerals. Kazakhstan recently announced geological survey results suggesting potential rare-earth reserves of more than 20 million tons, while Uzbekistan has confirmed multiple critical mineral deposit sites, cementing the region's status as an emerging supply market.

"Major countries are working to reduce over-reliance on any single import source and diversify their supply chains by pursuing cooperation with Central Asia — moving beyond mere diplomatic rhetoric to concrete collaboration backed by real fiscal investment," Kim said.

In practice, the United States is channeling support through the US International Development Finance Corporation, while Europe is using the European Bank for Reconstruction and Development to help develop Central Asia's mineral extraction industry. Japan plans to leverage its state-owned energy company, the Japan Organization for Metals and Energy Security, to back private investment as well.

Kim also recommends that South Korea strengthen cooperation with Central Asia by drawing on its manufacturing strengths — not only securing critical mineral supplies from the region but also partnering at the manufacturing stage. She added that Seoul should consider extending support to third countries in areas such as financial assistance and mineral processing to build a more durable cooperative relationship.

"South Korea can develop its own Central Asia cooperation model by leveraging its downstream manufacturing capabilities and equity investment, while complementing relatively weaker midstream — refining and processing — capacity through role-sharing with allied countries," Kim said.

She added that South Korea should strengthen logistics connectivity to bolster supply chain security, and pursue international consortiums involving both government and private companies rather than going it alone on large-scale investments. "South Korea should participate by focusing on sectors where it has competitive strengths — shipbuilding, electronic customs clearance, and maritime logistics — and should consider linking with Western-led capital and financial platforms in areas requiring large-scale investment as a way to mitigate risk," she said.