In late April, the Financial Times reported that Donald Trump Jr. and Eric Trump had, through a shell company named Skyline, acquired a 20% stake in Kaz Resources. This entity is now poised to develop the world's largest tungsten deposit in Kazakhstan, backed by up to $1.6bn in U.S. government financing. The deal exemplifies growing U.S. strategic interest in Central Asian critical minerals.
Critical minerals are increasingly prized economic and geopolitical assets. These resources are essential for renewable energy, defense, and high-tech applications such as semiconductors and electric vehicles. Central Asia is a major, and largely underdeveloped, source of these materials.
While mineral-rich Kazakhstan has gained sustained international interest, Uzbekistan is also poised to benefit from this momentum. Tashkent is rich in tungsten, copper, uranium, molybdenum, and several other critical minerals. A notable sign of Uzbekistan’s growing ambitions is the Critical Minerals Pact, which U.S. President Trump and Uzbek President Mirziyoyev signed in February 2026, securing access for U.S. investors to the Uzbek market.
But Uzbekistan faces a major uphill battle if it is to become a key global supplier of rare earths.
The Geopolitics of Critical Minerals
The continuous supply of critical minerals is a high priority on the geopolitical agenda of Western powers, as China currently holds a dominant position in their supply chains. According to the IEA's Global Critical Minerals Outlook 2025, China is the dominant refiner for 19 of the 20 energy-related minerals analyzed, accounting for roughly 70% of global processing capacity overall. In individual minerals, the concentration is even more stark: data from 2024 shows China as the leading producer or processor for roughly 99% of gallium, 95% of magnesium, 83% of tungsten, 79% of graphite, and over 69% of all rare earths.
China's near-total control over many critical minerals was weaponized when Beijing significantly expanded its export control regime from 2023 onwards, demonstrating its ability to restrict global access to rare earth elements. European manufacturers were affected by export restrictions, leading to price spikes and disruptions in factory operations.
The United States and the European Union are now actively seeking to reduce this dependence on China, though through different means. The United States pursues policies of strategic stockpiling and partner engagement, and the European Union pursues policies of supply diversification, strategic partnerships, and the promotion of circularity of these materials.
This is where Central Asian countries are becoming more relevant. Central Asia boasts a wide array of CRMs in its subsoil, including copper, tungsten, manganese, and zinc. At the first EU-Central Asia summit in Samarkand in April 2025, European Commission President Ursula von der Leyen remarked that the region is endowed with immense resources and signed a €12 Billion investment package, in part dedicated to critical minerals. The United States has moved in parallel, formalizing critical minerals cooperation with all five Central Asian states at the November 2025 C5+1 Leaders' Summit in Washington.
Kazakhstan, with its long-established mining industry and long track record of international investment, has thus far been the primary beneficiary of this interest. Kazakhstan has already developed a large mining sector with foreign investors, accounting for more than 12% of its GDP in 2024. Considering the political momentum and geological endowment, neighboring Uzbekistan is also aiming to capitalize on the rising projected demand for critical minerals. However, Uzbekistan has thus far not been able to attract levels of foreign investment comparable to those in Kazakhstan.
This is partly because investment propositions of individual countries are shaped not only by geological, political, and economic parameters. Especially for the mining industry, the institutional environment for foreign investors, primarily the regulatory framework and other practical parameters, is a prerequisite to commit long-term capital. That is where Uzbekistan faces its harshest challenges.
The Case for Uzbekistan
Uzbekistan has recognized the economic potential of its resources. International political and economic trends align with the country’s domestic reforms to become a more open economy, aiming to attract foreign capital and open its subsoil to foreign investors. These domestic reforms were much needed, given Uzbekistan’s past restrictions on foreign mining enterprises.
Under Islam Karimov, who was president until 2016, Uzbekistan was one of the Central Asian post-Soviet states most resistant to liberalizing its market, in contrast to Kazakhstan and Kyrgyzstan. Uzbekistan did not reform its economy; rather, it pursued its export-based economic model, in which natural resource rents were reinvested in import-substituting industrialization. The country retained significant state control over key sectors, including the mining and metallurgical sector, which was dominated by two state-owned enterprises, NGMK and AGMK. In 2024, UzTMK, a spin-off of the latter, was established to pursue critical mineral projects and international outreach.
As Uzbekistan maintained state control, the necessary institutions and legislation relevant to the mining sector were underdeveloped and not aligned with market standards. Under the 2002 subsoil law, mining rights were granted via licenses through tenders or negotiations, where NGMK and AGMK were practically dominant. Mining rights and access extension procedures were opaque and lacked transparency, in contrast to today’s electronic platform for bidding for licenses, following new legislation approved in March 2022.
Lastly, Uzbekistan was restrictive as an investment location due to the tight control over the foreign exchange regime and repatriation terms. Currency inconvertibility strained international investments in Uzbekistan, as international transactions and repatriation of earnings were only possible under very unfavorable terms.
Since Mirziyoyev assumed the presidency in December 2016, the country has undergone rapid institutional reforms and market liberalizations. Prominently, in September 2017, Mirziyoyev liberalized the foreign exchange regime, resolving one of the greatest grievances for foreign enterprises. Further, in 2019, the law on Investments and Investment Activity was passed, and more recently, in 2024, the Subsoil Use Act relevant to mining and metallurgical activity was passed. Both laws aim to create an equal playing field for foreign investors and improve the “ease of doing business.” All in all, Uzbekistan’s mining sector is undergoing reforms that are improving transparency, regulatory predictability, and modernization.
However, investor skepticism persists, and the country has so far failed to attract significant foreign capital into mining projects. This doesn’t only come from different vested interests, but also because the commercial calculus differs from the political strategic calculus of CRM investments. The political momentum has been very strong in the last year with U.S. backing, but there is still a gap with the commercial reality.
Geopolitical Constraints
The critical mineral mining & processing industry is highly politicized since secure access to critical minerals strongly impacts energy, defense, and high-tech industrial capabilities. Uzbekistan’s geopolitical position has improved through regional cooperation in Central Asia and Russia’s decreasing, yet present, influence in the region.
At face value, Russia’s diverted focus to the war in Ukraine and the subsequently increased rapprochement by the European Union and the United States with Central Asia demonstrate shifting dynamics in the region’s geopolitical alignment. There are good reasons to surmise that Central Asian countries’ increased agency, defined as the ability to set their geopolitical alignment autonomously, is growing. This is exemplified by Central Asia’s increased options, including the SCO, the C5+1 formats from the EU and U.S., Russia-led economic and security initiatives, and the EAEU and CSTO.
The geopolitical momentum is translating into concrete buyer interest, offering a window of opportunity for investments in mining projects. The EU signed a critical raw materials Memorandum of Understanding with Uzbekistan in 2024, the EBRD committed a record €2.2 billion across Central Asia in 2024, and the February 2026 U.S.-Uzbekistan critical minerals alliance established joint investment frameworks and secure offtake pathways. Germany, Japan, and South Korea have each signaled parallel interest.
However, realizing Uzbekistan’s potential faces several constraints. Some existing constraints are both practical, while others are more political in nature. For example, infrastructure remains a challenge, as the Middle Corridor, the main export route to Western markets that bypasses Russia, has limited capacity and passes through multiple customs regimes, creating transit costs and logistical uncertainty. Further, despite institutional reforms, the domestic political system remains complicated. Lastly, the development of trade routes, the resolution of (contentious) regional issues, and the security required for long-term investment safety in Uzbekistan are dependent on geopolitics. Thus, committing long-term capital to Uzbekistan carries geopolitical risks for mining companies.
Domestic Limitations
The domestic political context is a strong determinant of the risks associated with operating in a jurisdiction. This is because domestic politics drive institutional changes that determine the relative difficulty of securing mining rights and the further development of mining-relevant regulations and institutions in a country. In the mining and metallurgical industry, the policy climate is an important factor in investment decisions. Uzbekistan is a challenging state to operate mining enterprises, and thus has not received much investment in mining yet.
In contrast to more established mining geographies, Uzbekistan only recently revised its mining legislation to meet modern standards. Yet, Uzbekistan remains an unappealing investment destination, as doubts persist about the credibility of institutional reforms following past incidents involving international mining companies.
To assess Uzbekistan’s existing domestic environment’s competitiveness for international mining investments, it’s worthwhile to compare it with its regional neighbor, Kazakhstan, which has attracted considerable foreign investment, with an FDI stock of $166 billion as of January 1, 2025.
Unlike Kazakhstan, Uzbekistan did not join the WTO and has not met its requirements, and it still scores lower on most World Bank governance indicators. Given that only large enterprises and investors can negotiate with the presidential administration to make arrangements that diverge from the general regulatory frameworks, the aforementioned factors are a deterrent to smaller or medium-sized enterprises and investors. The OECD has also published several reports on Uzbekistan documenting the difficulties of operating there. The institutional reforms, co-created with international financial institutions such as the IFC and the EBRD, further underscore Uzbekistan's developmental state.
Similarly, the quality of regulations and the credibility of restrictions on government power are important for foreign businesses operating in a jurisdiction such as Uzbekistan. Uzbekistan ranked 114th in constraints on government powers (0.37) and 120th in government transparency. The country also scored 0.50 out of 1.0 in the 2025 WJP Rule of Law Index, placing 81st out of 143 countries.
Further, unlike Kazakhstan, Uzbekistan does not participate in the Extractive Industry Transparency Initiative (EITI) and is not a CRIRSCO member. The EITI standards are important to Western mining enterprises that operate in accordance with them. CRIRSCO is important to signal the reliability of geological reserve data reporting.
Investors are reluctant to invest in Uzbekistan given its reputation following past mining expropriation incidents. During Karimov’s presidency, several legal proceedings regarding expropriation allegations were held against the state of Uzbekistan by Oxus Gold and Metal-Tech Ltd. In such a global competitive industry, it is hard for Uzbekistan to attract foreign investment in its mining sector without clear positive differentiators vis-à-vis other investment destinations and a poor historical track record. There are still doubts about Uzbekistan’s regulations and investor protection, which deter investors.
However, Uzbekistan’s legislation is undergoing rapid modernization, and positive differentiators may appear in geological factors, its geopolitical alignment with the U.S., securing offtake, and the fiscal regime. Special tax regimes negotiated with the government (for example, within the framework of a production-sharing agreement), the geological endowment, consisting of ore grades of specific minerals, and the intergovernmental Memorandum of Understanding on critical minerals with the U.S., may still provide Uzbekistan with financial benefits as an investment destination, and thus positive differentiators. If the Uzbek government can signal reform credibility and a competitive investment case to international mining investors, it can attract foreign investment. In reality, this is a very challenging undertaking.
Practicalities: Connectivity, Energy, and Water
Lastly, mining potential can only be realized if material requirements are met. Mining projects require surrounding physical infrastructure, water, and energy resources.
In Uzbekistan and the wider Central Asian region, connectivity is increasing, but infrastructural limitations remain. In fact, large-scale connectivity projects in the region are highly politicized, as different geopolitical actors investing in connectivity with or through Central Asia have their own political aims. In the context of Uzbekistan, the connectivity to be developed closely relates to the ability of different actors to offtake the critical minerals.
Large infrastructure investments in Central Asia are part of the China-led Belt & Road Initiative (BRI) and the European Union’s Global Gateway initiative. The latter mainly promotes the Trans-Caspian Transport Corridor, a transport route through Central Asia and the Caucasus that bypasses the Russian Federation. Currently, much of the trade volume from Central Asia, including Uzbekistan, destined for Europe or the U.S., is transited through Russia, creating transit risks that enable Russia to leverage this dependency.
Energy in Uzbekistan is not abundant. The energy demand is projected to grow rapidly, along with broader economic development across its vast population of 38 million people. To meet this demand, Uzbekistan is actively investing in both fossil and renewable energy sources. A large project to diversify the energy supply is the nuclear power plant, to be built by Rosatom, which is to provide up to 15% of its domestic electricity needs once operational. At the same time, this is a water-intensive form of energy generation, which raises another pressing issue in Uzbekistan: water scarcity.
The problem of water scarcity in Central Asia stems not only from plain scarcity, as the term suggests, but also because of poor management and a lack of coordination. After the dissolution of the Soviet Union, national interests emerged as paramount to regional interests. The core of the water disputes is that Kyrgyzstan and Tajikistan own the upstream of the rivers in Central Asia. In contrast, Kazakh and Uzbek agricultural and industrial activity require sufficient and timely downstream flow. Further water-intensive industrial activity in Uzbekistan, such as critical mineral mining, would amplify this already contentious regional issue.
To overcome these practical challenges, regional cooperation is paramount. Each practical prerequisite can be met only through alignment and action by multiple regional actors. Uzbekistan has the potential to capitalize on its critical mineral wealth by attracting foreign investment and facilitating technology transfer. However, it depends on Uzbekistan’s ability to sustain its political momentum for increasing regional cooperation, credible institutional reforms, and meeting the infrastructure and resource needs of mining operations.
About the Author:
Wim Doornenbal is a Visiting Research Fellow at the Westminster International University in Tashkent. His research focuses on the mining industry in Central Asia, with a focus on Uzbekistan. His educational background is in management studies.