As the United States seeks to rally countries into a bloc to counter China’s dominance in the extraction and processing of critical minerals and rare earth elements, doubts have emerged in Lithuania over how to respond. Foreign Minister Kęstutis Budrys has indicated he would favour moving forward alongside the US, but Prime Minister Inga Ruginienė is urging caution, insisting that Lithuania await a common decision from the European Commission.
At the beginning of February, the United States Department of State convened representatives from 54 countries and the European Commission in Washington to discuss how best to challenge China’s dominance in the mining and processing of critical minerals and rare earths.
Minerals such as lithium, cobalt, copper and nickel are widely used in the defence, medical and electronics industries. China partly controls their extraction in a number of countries and is the undisputed leader in processing.
Critical minerals and rare earth elements are often described as the oil of the 21st century, and competition over their extraction and refinement is intensifying.
Budrys urges swift decision-making
Lithuania was invited to participate in the US initiative at ministerial level, and Budrys travelled to Washington. However, the country did not sign the non-binding memorandum of understanding that 11 states concluded with the US, among them Argentina, Morocco, the Philippines, the United Arab Emirates, the United Kingdom and Uzbekistan.
“The Americans presented a draft for individual countries to agree on a bilateral basis, which could later evolve into a de facto new organisation setting trade conditions, investment rules and safeguards for critical minerals, including measures to prevent dumping and market manipulation,” Budrys told LRT.lt.
“Lithuania’s position is that we are inclined to move forward. It is a positive initiative. At last, the United States is offering co-operation in an area where it genuinely has strategic needs. This could open a new chapter in economic security, and we are minded to engage,” he added.
Following meetings in Washington, the European Commission, the US and Japan issued a joint statement expressing their intention to co-operate on extraction and processing.
Europe, however, must tread carefully between Washington and Beijing. President Donald Trump has taken a combative approach towards Europe, tensions remain over Greenland, and the EU cannot easily disentangle itself from dependence on China.
In comments to Bloomberg, Budrys said Lithuania could sign an agreement with the US without waiting for the EU if Brussels moved too slowly. The Commission had initially pledged to reach a decision within a month.
“Our intention is to proceed at European level. But time also matters. If that proves impossible, there is always the bilateral route,” he said, acknowledging that his remarks could be interpreted as an attempt to spur the Commission into action.
He argues Lithuania stands to benefit, even though it does not currently mine or process such materials. The country could participate in recycling and secondary processing, he suggests.
Sources say the foreign minister is keen to move ahead bilaterally, seeing alignment with US strategy as reinforcing Lithuania’s most vital interest: maintaining an American military presence as a deterrent to Russia.
Prime minister halts Budrys' initiative
At a meeting on foreign and security policy at the presidential palace on February 19, the issue surfaced again.
According to one source, the president voiced support for a critical minerals agreement, but the prime minister Inga Ruginienė intervened, asking what precisely that entailed. She stressed that the government had granted no mandate to sign and that Lithuania would await the European Commission’s assessment.
According to the same source, the foreign minister may have attempted to influence Prime Minister Inga Ruginienė through the president, though it appeared unsuccessful. Social Democratic politicians have repeatedly suggested that Budrys is eying the presidential post.
“Budrys is conducting a presidential campaign. He needs something to show, so he can say: I delivered a breakthrough in relations with the United States,” one politician said.
Ruginienė later confirmed that the government would make the final decision once a definitive text was available. “No one currently has the authority to sign. This is a matter for the government, not for individuals,” she said.
Speaking to BNS, she insisted that there is no disagreement on this issue with Foreign Minister Kestutis Budrys,
“There is no disagreement, the government's position is clear,” Ruginienė told reporters on Friday. “Negotiations with the US are currently underway, and we will definitely wait for the final text before drawing conclusions and deciding whether to join this agreement. We will not take any separate action; we agreed on this yesterday in Brussels. Europe must speak with one strong voice.”
Budrys, for his part, maintains that urging the Commission to act swiftly does not contradict the government’s agreement to await its findings.
“In the context of tariff wars and US efforts to shield certain sectors of its industry, we need areas where we can co-operate and share common interests. In matters relating to defence industry and dual-use goods, we need a framework with America.
This is the format they have proposed. It is highly developed, contains concrete solutions and envisages a major international agreement. We must respond to it. Later, we can expand co-operation into other areas. Critical minerals are not the only issue – China wants to undermine entire industrial sectors in Europe,” the minister said.
Asked whether it was possible that the Americans might not wait indefinitely and could present individual European countries with an ultimatum – “take the agreement or step aside” – Budrys said such a scenario could not be ruled out.
China’s overwhelming dominance
Critical minerals are generally defined as those essential to a country’s economy and national security, whose supply chains are vulnerable and for which substitutes are limited. Modern economies would struggle to function without them.
For example, the manufacture of smartphones requires more than thirty different minerals: indium for touchscreens; tantalum for capacitors; rare earth elements for displays and speakers; lithium and cobalt for batteries; and gallium and silicon for chips.
Rare earth elements comprise 17 metals in the periodic table: the lanthanides, plus scandium and yttrium. Though not especially scarce, they are rarely found in high concentrations, making extraction and refining costly. Their supply chains are even more fragile than those of other critical minerals.
According to analysts at the Lithuanian Confederation of Industrialists, China identified rare earths as a strategic resource as early as 1980 and has since invested heavily in extraction and processing. Today it accounts for roughly 60–70% of global mining output and around 90% of processing capacity.
“The whole world saw this developing over a long period, but there were continued attempts to work with China. Donald Trump raised questions about rare resources during his first term, but at the time semiconductors were the more pressing issue and rare earths remained the unseen side of industry,” said Eglė Stonkutė, the analyst and economist at the Lithuanian Confederation of Industrialists.
Demand for rare earths has surged in recent years due to growth in artificial intelligence, data centres, renewable energy and electric vehicles, as well as renewed emphasis on defence production. Meanwhile, supply remains concentrated.
“I like to point out that, for example, F-35 Lightning II fighter jets cannot take off without magnets made from rare earth elements. They are also used in weapons control systems,” said Stonkutė. “If you recall, when the US raised the issue of tariffs on Chinese goods and services, China played the critical minerals and rare earth card, signalling it could restrict exports. Only then did America step back. China absolutely dominates this field globally, and the American initiative is a response to that reality.”
According to her, critical metals and rare earth elements are located where they are found, prompting countries to rush to invest in extraction and to strike deals with states endowed with such resources.
For example, the Democratic Republic of the Congo produces large quantities of cobalt, a key component in electronics and aviation. Stonkutė quips that in the Congo the Americans are building a railway towards the Atlantic, while the Chinese are constructing one in the opposite direction.
“Extraction is one thing, but there is also processing. It is a complex process and not particularly environmentally friendly. In the European Union, because of environmental requirements, opening a new mine might still be feasible, but establishing processing facilities would be more difficult. There is no realistic prospect of the EU becoming self-sufficient in rare resources by 2030. At best, it might reach 10-20% in extraction, and up to 40% in processing – provided materials are imported from other countries,” she said.
Best response for Lithuania?
Stonkutė argues that Lithuania should first conduct geological surveys to determine whether viable deposits exist.
“The second question is: if something is found, is the deposit economically viable? You don’t dig a hole for a hundred grams of gold. Our geologists say there are indications that certain compounds may be present in Lithuania,” she said.
In her view, participation in the US initiative could benefit Lithuania through access to technology. However, as a small country, it would be better off acting together with the wider European bloc rather than alone.
Former diplomat Eitvydas Bajarūnas, who also works at the Lithuanian Confederation of Industrialists, contends that, geopolitically, it would be unusual to reject a US offer outright. However, he adds that Lithuania’s interests would be best served by pursuing an “and-and” approach: supporting the American initiative while remaining aligned with the broader European position.
Critical minerals, he argues, are not merely a matter of commerce but of geopolitics – and Europe must also safeguard its own strategic interests, particularly as competition intensifies in regions such as Greenland, believed to hold significant untapped reserves.
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