The Fight for the World’s Most Critical Technology
March 4, 2025
Finance took center stage in the raw materials sector this week. The Netherlands and South Korea announced state-backed funds for critical minerals and key industries. Meanwhile, China released the first batch of export data for the year’s first two months.
NO DEAL BETWEEN THE US AND UKRAINE:
The planned deal between the US and Ukraine regarding access to natural resources has fallen through. The signing was scheduled for last Friday, but the meeting between Ukrainian President Volodymyr Zelensky, US President Donald Trump, and his Vice President JD Vance ended in a diplomatic clash that has caused an international stir. Trump accused Zelensky of lacking gratitude for the support already provided. Zelensky had previously demanded security guarantees as a prerequisite for peace negotiations with Russia.
Such guarantees were not included in the document that was supposed to be signed on Friday. Unlike an earlier draft, which proposed that the US would receive $500 billion of potential revenue from Ukrainian natural resources in exchange for past military and financial aid, the revised agreement does not focus on direct repayment.
Instead, a joint fund was planned to rebuild the country that Russia had attacked. Under this agreement, Ukraine would contribute 50 percent of the proceeds from the future monetization of state-owned mineral resources—including oil, gas, and infrastructure such as port facilities—to the fund. The document states that how the fund will operate and be managed will be determined at a later date.
Extent of Rare Earth Deposits Unclear:
According to the German Bundestag analysis, Ukraine possesses reserves of titanium, lithium, and rare earth elements. However, the US think tank Center for Strategic and International Studies points out that data on the potential economic extraction of these resources is limited. Additionally, the war has destroyed critical infrastructure necessary for mining, including energy supply systems. Another challenge is the further processing these raw materials, as China dominates this value chain stage. At the same time, the necessary capacities in both the US and Europe are still being developed.
It remains unclear whether the deal will still materialize and in what form. While the Ukrainian president remains open to an agreement, US Treasury Secretary Scott Bessent has stated it is off the table for now.
Update: The latest update is that Ukraine and the US may sign a deal this Tuesday, March 11th.
CANADA EXTENDS TAX CREDITS FOR STRATEGIC METALS EXPLORATION:
According to a government statement, Canada plans to extend tax credits for critical mineral exploration activities for two more years. Originally set to expire at the end of March, the program helps Canadian companies, particularly juniors, raise capital by issuing flow-through shares. These shares allow investors to deduct them from their taxable income, making them a key incentive for investment.
Widely used in Canada’s natural resources sector, they support cost-intensive exploration and mining activities. It can take years or even decades before a mine begins generating revenue for a company. The process—from exploration and development to final construction—is lengthy and capital-intensive, requiring significant investment long before any returns are realized.
According to the statement, extending the program by two more years is expected to inject approximately $76 million (CAD$110 million) into the sector. Canadian Minister of Energy and Natural Resources Jonathan Wilkinson stated that the extension “reaffirms Canada’s commitment to strengthening this vital sector.”
The move aligns with Canada’s Critical Minerals Strategy, with which the North American country seeks to position itself as an alternative raw materials supplier to industry leader China. Key announced initiatives include accelerating permitting processes and developing essential infrastructure like roads, railways, and electricity networks.
EUROPE: NETHERLANDS PLANS STRATEGIC METALS FUND:
Italy, France, Germany, and others have already launched similar financing tools.
Invest International, a Dutch government-backed organization focused on facilitating international investments, has announced plans to launch a public-private investment fund targeting critical raw materials. According to a statement by the organization, the fund aims to enhance Dutch companies’ access to existing supply chains while boosting alternative sourcing through increased recycling efforts and improved resource efficiency.
Dutch and foreign companies operating within the country are spread across the critical minerals value chain, from mining to processing, manufacturing, and recycling. However, according to The Hague Centre for Strategic Studies, the Netherlands is nonetheless import-dependent, especially in high-tech fields like the semiconductor and electronics industries.
The fund is set to partner with banks, pension funds, and other EU-backed organizations to outline a suitable investment strategy for projects attempting to address this dependency. The push aligns with efforts in other European states, as countries like Germany and France have already implemented similar financing tools.
SOUTH KOREA TO LAUNCH $34.4 BILLION FUND:
Batteries, Robotics, AI. Asian countries seek to safeguard the global competitiveness of their industries.
On Wednesday, South Korea’s government announced plans to establish a $34.4 billion (50 trillion won) “Advanced Strategic Industries Fund” to bolster its high-tech sectors, including semiconductors, artificial intelligence, robotics, and batteries. With the fund, the government seeks to safeguard the country’s future global competitiveness.
The tool explicitly targets small and medium-sized enterprises across the entire supply chain of these industries to bolster the whole industry, in addition to large corporations.
President Choi Sang-mok highlighted, “Competitiveness in advanced strategic industries has emerged as the core of national economic security amid heightened external uncertainty under the new U.S. administration.” He added that governments would engage in a “war without gun smoke. “
The support methods will include long-term loans and equity investments tailored to company needs. The government will issue government-backed bonds to finance the fund, with the Korea Industrial Bank’s resources covering operational costs.
The fund’s legislation is expected to be submitted to the National Assembly in March 2025.
High-Tech Industry Hungry for Critical Minerals:
Less than a month ago, South Korea announced another fund to strengthen the supply chains of critical minerals essential to its industry. The country lacks large-scale domestic mining and refining capacities and is highly import-dependent, especially on industry leader China.
The government plans to catalyze investment in the sector through the fund to change this. Another approach South Korea takes involves international cooperation with resource-rich countries, such as Malaysia, with a partnership announced in November.
BELARUS PLANS TO TAP NATURAL RESOURCES:
Rare earth elements are currently a key focus of global politics, whether in Greenland or Ukraine. Now, Belarus is seeking clarity on its own natural resources. President Alexander Lukashenko, in power since 1994, has declared rare earths the country’s “top priority,” according to the state news agency Belta. He also acknowledged that geological exploration in Belarus remains underdeveloped. In addition to rare earth elements, the country aims to explore oil and gas deposits.
Belarus, also known as White Russia, is one of the world’s leading potash producers, a key ingredient in fertilizer production. However, since 2021, the European Union has banned the import of potash and certain potassium compounds from Belarus, along with gold, diamonds, helium, coal, and mineral products, including crude oil. Amid Belarus’ military support for Russia’s invasion of Ukraine, the EU has recently tightened existing sanctions against the country.
EUROPE: A NEW STRATEGY –
Innovations, EV quotas, and autonomous driving:
The EU’s new strategy.
The European Commission aims to make the domestic automotive industry more competitive with an ambitious action plan. Key initiatives include incentives to expand electric mobility, revised CO₂ fleet targets, advancements in autonomous driving, and stronger battery supply chains. Funding will come from existing EU programs, with additional private investments to be mobilized. EU Commission President Ursula von der Leyen announced the plan on Monday following consultations with industry representatives in Brussels.
The plan includes leasing programs for new and used electric vehicles, particularly to support low-income households. These programs address the high upfront costs that remain a barrier to EV adoption. Additionally, the EU will invest €570 million in charging infrastructure and draft legislation mandating a minimum share of zero-emission vehicles in corporate fleets.
More Flexibility for Car Manufacturers:
Later this month, the Commission will propose amendments to CO₂ emissions regulations, granting automakers more flexibility. Compliance will be assessed over a combined period instead of strict annual targets for 2025, 2026, and 2027, eliminating penalties for missing individual yearly goals. The European Automobile Manufacturers’ Association (ACEA) estimated compliance costs to be up to €16 billion, warning that excessive financial strain could reduce investments in research and development.
Innovations and a Potential Rethink of the 2035 Combustion Engine Ban:
Alongside relaxed penalties, the Commission is embracing technology neutrality—another key industry demand. This shift could also lead to reconsidering the planned 2035 ban on new combustion engine vehicle sales. Von der Leyen announced an expedited review of the policy, with EU Transport Commissioner Apostolos Tzitzikostas confirming that it will take place this year rather than in 2026 as originally planned.
Currently, the EU allows exceptions for combustion engines running on synthetic, climate-friendly fuels (E-fuels). However, experts remain skeptical about large-scale adoption, citing limited production capacity, high costs, and significant energy demands.
Boosting Autonomous Driving and Reducing Dependence on China:
To strengthen Europe’s position in autonomous driving, the Commission plans to launch an industrial alliance focused on software, chip development, and supporting technologies. Regulatory frameworks will also be adjusted to accelerate the deployment of self-driving vehicles on European roads.
Additionally, the EU aims to enhance the domestic battery value chain and reduce reliance on China. Measures include increased recycling efforts, streamlined investment processes, and simplified permitting for refining raw materials.
Mixed Reactions and the Road Ahead:
ACEA and the German Association of the Automotive Industry (VDA) welcomed the Commission’s proposals as positive steps but stressed the need for further legal clarifications and adjustments. However, the environmental organization Transport & Environment criticized the planned relaxation of CO₂ fleet targets, arguing that it would only widen China’s lead in EV production.
The proposals are not yet final. They must then be approved by the European Parliament and the EU Council.
CHINA: SIGNIFICANT DECLINE IN RARE EARTH IMPORTS:
The Chinese customs authority released the first batch of export data, including rare earth statistics, covering January and February on Friday*. Year-on-year, exports slightly declined nearly 3% to 8,511 tons. In contrast, imports dropped sharply by 24% to 16,922 tons.
China imports these raw materials for further processing, including from neighboring Myanmar. Last year’s unrest in Myanmar disrupted mining operations, which was reflected in China’s trade statistics. The authority will publish more detailed import data for the current period in the second batch of data, which will be released in the coming weeks.
