Geoeconomic Challenges and Confrontation in the Rare Earth Metals Sector: Ukraine Between the US, China, and Russia

The global competition for strategic resources, particularly rare earth metals (REMs), has become a crucial aspect of the geopolitical rivalry between the United States and China.

Global Competition for Strategic Resources

The global competition for strategic resources, particularly rare earth metals (REMs), has become a crucial aspect of the geopolitical rivalry between the United States and China. The recent agreement between the US and Ukraine on the extraction and exploitation of rare earth deposits has triggered a new wave of tensions, especially from China, which has traditionally held a dominant position in this market. Meanwhile, Moscow seeks to leverage the situation to adjust its own stance in global resource policy.

China’s Reaction and Its Underpinnings

China, which controls approximately 90% of global REM production, has repeatedly used its status as a geoeconomic leverage. The politicization of the REM market has allowed Beijing to influence the technological industries of the US and Europe. However, the growing dependence of developed countries on Chinese supply chains has prompted efforts to diversify sources of raw materials.

A statement by Wang Wen, Dean of the Chongyang Institute for Financial Studies at Renmin University of China, characterizing the US-Ukraine agreement as an “imperialist plunder,” reflects Beijing’s concerns over losing its de facto monopoly on the REM market. According to China, Kyiv has become the target of external pressure, and agreements with the US are perceived as unjust. Chinese experts predict long-term socio-economic consequences for Ukraine should it become merely a resource appendage of Washington.

The US: Strategic Initiative and Economic Rationale

The signing of the US-Ukraine agreement on rare earth metal extraction comes amid the escalation of the trade war between Washington and Beijing. President Donald Trump has explicitly stated that the US will not allow China to gain “unilateral advantages,” particularly in high-tech sectors reliant on REM supply chains.

Washington aims to reduce dependence on China by developing alternative suppliers, with Ukraine being considered one of the most promising options. US Treasury Secretary Scott Bessent emphasized that the agreement is not only economic but also political, as it is intended to contribute to stabilizing relations between Kyiv and Moscow. However, this assertion raises doubts given the current state of Russian-Ukrainian relations.

The Russian Factor: Attempting to Intervene

Russia, having previously curtailed its own REM production due to technological deficiencies, is now attempting to regain its footing in the market. Notably, Moscow’s proposal to cooperate with the US in rare earth extraction appears to be a response to the US-Ukraine agreement. At the same time, the Kremlin is also signaling to Beijing that Russia is no longer an unequivocal ally and could easily become a hostage to Washington’s interests.

Nevertheless, judging by China’s firm diplomatic stance on the Ukrainian issue, Beijing is unlikely to reconsider its position. China's strategy is based on the assumption that Russia will ultimately remain within its sphere of influence, particularly as Western sanctions intensify.

Ukraine: Between Economic Benefits and Geopolitical Risks

For Ukraine, attracting American investments into REM extraction could become a significant factor in economic recovery. However, there are substantial environmental and social risks involved. Rare earth metal extraction is associated with high costs and significant environmental pollution, which may provoke domestic resistance.

Moreover, the agreement with the US effectively removes Ukraine from China’s potential sphere of influence in this sector. Beijing, which had previously considered participating in Ukraine’s economic recovery, may adjust its plans and increase economic pressure on Kyiv.

The global struggle for rare earth metals has become a key element of strategic competition between the US and China. Possessing significant resource potential, Ukraine has found itself entangled in this conflict, which may lead to both economic benefits and serious geopolitical risks.

The US, by ensuring supply chain diversification, seeks to reduce its dependence on China and firmly integrate Ukraine into its economic orbit. At the same time, China perceives this as a loss of its monopolistic influence and will attempt to safeguard its interests. Russia, for its part, is leveraging the situation to strengthen its negotiating positions with both China and the US.

In the coming years, the situation will remain unstable, as control over REM extraction and supply has not only economic but also significant political implications. The success of the American initiative will depend on Ukraine’s ability to manage its resources effectively while avoiding excessive external influence from global players.