Progress In The US Acceleration Of Rare Earth Supply Chain Restructuring – Analysis

 July 24, 2025 

By Anbound

By Zhou Chao

As is widely known, China holds a significant advantage in the global rare earth industry. According to data from the U.S. Geological Survey (USGS, 2024), China’s rare earth reserves account for approximately 33.8% of the global total, with particularly abundant reserves of medium and heavy rare earth elements such as terbium and dysprosium, which have limited global substitutes. In 2023, China’s rare earth mineral production reached 210,000 tons, nearly 60% of the global total, far exceeding that of other countries.

At the industrial chain level, China possesses the world’s most comprehensive rare earth industry system, encompassing aspects from mining, smelting and separation, and metal preparation, as well as the manufacturing of functional materials and end products. Notably, the country’s smelting and separation capacity accounts for over 85% of the global total, with mastery of core extraction and separation technologies. Furthermore, China produces about 80% of the world’s rare earth permanent magnets, which are widely used in strategic industries such as new energy vehicles, electric motors, and wind power.

In response to the escalating technological and trade pressure from the U.S. and other Western countries, China has, since July 2023, gradually implemented export controls on germanium, gallium, certain rare earth smelting equipment, and permanent magnet products. These measures have created substantial constraints on Western industries, prompting U.S. and European companies to intensify lobbying efforts with their governments, pushing for policy easing and a shift toward negotiation.

Leveraging its resource endowment and industrial system advantages, China has gained strategic influence in the global rare earth industry. However, the U.S. has not remained passive. In terms of industrial chain restructuring, industry insiders have noted that the U.S. has already taken a series of key steps and is expected to continue advancing these efforts in order to gradually reduce its reliance on China in the rare earth sector.

First, the government provides capital investment and price support to offset China’s low-cost advantage and bolster the American rare earth industry.

On July 10, 2025, the U.S. took its most decisive action yet to weaken China’s dominance in the rare earth sector. The U.S. Department of Defense (DoD) announced a USD 400 million investment in MP Materials, the only American rare earth mining and refining company, acquiring a 15% stake and becoming its largest shareholder. In addition, it signed a price support agreement (USD 110/kg) to purchase neodymium and praseodymium at nearly double the Chinese market price.

This move aims to counter the exclusionary effect of China’s “low-price strategy” on Western markets. Previously, MP’s average selling price was only USD 52/kg, which severely squeezed the profit margins and investment incentives of Western companies. The price support mechanism, combined with funding under the Defense Production Act (DPA), has established a price floor for the U.S. rare earth industry. At the same time, JPMorgan and Goldman Sachs committed an additional USD 1 billion investment for MP’s new rare earth magnet plant, which is scheduled to begin operations in 2028 with an annual production capacity of 10,000 tons. Stimulated by this series of developments, MP’s stock price at one point surged by 60%, and shares of other rare earth companies also soared due to the government’s backing of the sector. Australia’s Lynas Rare Earths Ltd, which is building a refinery in Texas, rose by 20%, its highest level in over five years.

Analyses in the U.S. and other Western countries have previously pointed out that Western rare earth companies have gradually fallen behind in production capacity mainly due to the price advantage of Chinese firms. The DoD’s price support represents the kind of price guarantee that key U.S. mineral companies have long sought. This move marks a shift in the West’s approach in the rare earth sector from market mechanisms to strategic intervention. By using state capital and policy-based price support, they aim to break the low-price competition model dominated by China and attempt to build a sustainable rare earth economic ecosystem in the West.

Second, there is the acceleration of the U.S. mineral development, specifically on rare earth resource mobilization.

On July 11, U.S. Energy Secretary, the Governor of Wyoming, and other officials attended the groundbreaking ceremony for Ramaco Resources’ rare earth mining project in Wyoming. Originally a coal company, Ramaco discovered in 2023 that its Brook Mine contained up to 1.7 million tons of rare earth oxide resources, primarily including key elements such as neodymium, praseodymium, dysprosium, and terbium. The initial project plan includes launching a pilot plant within the year, with a total projected investment of around USD 500 million. If supported by a price floor mechanism similar to that of MP Materials, the project’s return cycle could be shortened to just three years, making it highly attractive to investors. This could become the first newly developed rare earth mine in the U.S. in 70 years. Its strategic significance lies not only in resource substitution but also in establishing a complete domestic “mining–refining–sales” closed-loop system, ensuring a stable supply of resources to domestic users, particularly in high-end sectors such as defense and technology.

Analysis by U.S. national laboratories shows that the Brook Mine deposit contains 40% rare earth element oxides, namely neodymium, praseodymium, dysprosium, and terbium—as well as three critical minerals of gallium, scandium, and germanium. On July 10, Ramaco Resources CEO Randall Atkins stated in a media interview, “We would intend to mine it here in Wyoming, process it here in Wyoming and sell it to domestic customers including the government”. A consulting report released this week found that fully developing the mine and processing facility would cost approximately USD 500 million. If the rare earths can be successfully mined and sold, the investment could break even within five years. If the DoD’s price support mechanism for MP Materials is extended to other U.S. rare earth facilities, the payback period could be reduced to three years, making rare earth investment even more profitable than other manufacturing sectors.

Third, the U.S. is now building a “Western industrial chain alliance” through coordinating efforts via the G7 and Quad mechanisms.

The U.S. is not merely restructuring its domestic supply chains but is aiming to build a global rare earth supply system that gradually reduces reliance on China. This strategy is being advanced through two key multilateral frameworks: the G7 and the Quadrilateral Security Dialogue (Quad). On June 16, the G7 summit released a draft statement proposing the development of a joint strategy for critical minerals to address supply vulnerabilities caused by China’s export controls, and to accelerate mechanisms such as diversification, coordination, and recycling. Then, on July 1, during the Quad meeting, over 40 companies from the U.S., Japan, India, and Australia held in-depth discussions on mineral cooperation. U.S. Secretary of State Rubio emphasized the need to build an integrated supply chain covering everything from raw material extraction and refining to material production. Among the four countries, Australia has mature capabilities in resource extraction, Japan specializes in refining and recycling, India has potential in refining, and the United States is focusing on military-industrial and capital-driven leadership. Together, they aim to establish a synergistic “alternative-to-China model”. In particular, this alliance may gradually reduce dependence on China in key technologies and equipment.

Researchers at ANBOUND believe that, based on the analysis compiled by industry insiders regarding the three major developments in supply chain restructuring, it can be concluded that after China began to “weaponize” its rare earth resources, large-scale, full-industry-chain efforts in the U.S. and other Western countries have been significantly activated. These efforts are being jointly advanced by industry, capital, governments, supporting legal frameworks, and multinational cooperation. This marks the latest evolution in the global rare earth landscape.

However, due to China’s long-term and substantial investment in the rare earth industry chain, the restructuring strategies pursued by the U.S. and Western countries are unlikely to yield immediate results. China is expected to maintain a lasting advantage in several key areas: resource structure with high reserves of medium and heavy rare earths and limited global alternatives, industrial costs benefiting from significant economies of scale in refining and magnet manufacturing, and technological capabilities with some purification and functional material technologies still at the forefront globally. That said, the strategic intent of the U.S. and the West in reshaping the rare earth industry is highly resolute, with little chance of reversal. Since the beginning of this year, U.S. and Australian companies have achieved breakthroughs in medium and heavy rare earth separation technologies, and the U.S.-driven development of bio-extraction methods has also made progress. These developments will certainly continue to pose a sustained challenge to China’s dominant position.

Final analysis conclusion:

While some believe that the U.S. lacks rare earth refining technology, faces stringent environmental standards, and has high manufacturing costs, it would be difficult for it to reduce its reliance on Chinese rare earths. However, current U.S. actions suggest otherwise: through government-backed capital support, price guarantees, and closer coordination with allies, the U.S. has been making consistent efforts to reduce its dependence on China. Given that the U.S. and other Western countries are the primary consumers of rare earth end products, the eventual impact of these measures should not be underestimated.

• Zhou Chao is a Research Fellow for Geopolitical Strategy programme at ANBOUND, an independent think tank.

Anbound

Anbound Consulting (Anbound) is an independent Think Tank with the headquarter based in Beijing. Established in 1993, Anbound specializes in public policy research, and enjoys a professional reputation in the areas of strategic forecasting, policy solutions and risk analysis. Anbound's research findings are widely recognized and create a deep interest within public media, academics and experts who are also providing consulting service to the State Council of China.

The Midsummer Economy: Going Downhill Slowly – Analysis

 July 24, 2025 

By Dean Baker

It’s easy to look at the Trump administration and point to all the serious economic mistakes it is making. However, economic mistakes do not necessarily lead to a recession and certainly not to a crash, as some critics seem to expect.

In fact, some of the economic mistakes are offsetting. A bad policy in one direction, say big tax cuts for rich people, may offset a bad policy in the other direction, say cutting Medicaid and research funding. The former raises the risk of too much demand, while the latter reduces demand both directly and indirectly. While it is easy to attack both policies, the problems at least from an economic perspective (we don’t need to give rich people more money and power) are largely offsetting, at least in the near term.

Before looking more closely at the economic picture at the Trump administration’s six-month mark, it’s worth stepping back and reminding everyone how slowly a disaster can be in developing. I was watching the housing bubble grow from 2002. It was clear that it was driving the economy, both from a huge surge in housing construction and also from consumption driven by the housing equity generated by the bubble.

Having first been convinced that the run-up in prices was a bubble in the summer of 2002, as in not driven by the fundamentals in the housing market, I expected that it would soon peak and start to reverse course as the stock bubble did in 2000. Contrary to my expectations, it continued to grow until the summer of 2006.

Prices grew far higher than they had been in 2002 when I first became convinced of the bubble. The bad lending practices that were already visible in 2002 exploded to the point where they had become a joke within the industry. People in housing finance openly talked about “liar loans” and NINJA loans, which stood for “no income, no job, no assets.”

To be clear, the lying was driven at least as much by the lenders as the borrowers. We had created a system of securitization where the profit was derived from issuing the loan, not from having a homeowner who would repay it. Mortgage issuers were happy to issue loans that they had no reason to expect would be repaid because they knew they could resell just about anything in the secondary market.

Anyhow, the fun pretty much ended by the summer of 2006. That was when the subprime market largely froze, and house prices began to drift lower. However, the economy remained healthy, growing 2.8 for the full year. The growth even continued through most of 2007, which registered 2.0 percent growth for the full year.

We stopped creating jobs in December of 2007 and the recession gradually gained speed in 2008 as the trickle of bank failures turned into a monsoon. By October, we had the Treasury Secretary, accompanied by the Fed chair and head of the New York Federal Reserve Bank, running to Congress demanding hundreds of billions to bail out the banks, warning that without the money it would be the end of capitalism.

This was a long trip down memory lane, but the point is that even when you have a clearly disastrous situation, it takes a long time for the impact to be felt. The US economy is often compared to an oil tanker at sea, which takes many miles to slow and bring to a stop. Even that analogy probably understates the force of economic momentum, and the US economy had lots of momentum going into 2025, a point that even the media can acknowledge now that the election is behind us.

Where Are We Now?

It’s a bit bizarre that many commentators talk as though the economy is still sailing along just fine. While we are not in a recession, the economy did shrink by 0.5 percent in the first quarter. There were unusual factors driving that fall. Imports soared as households and businesses stocked up on imported goods ahead of anticipated tariffs. But there is no way that anyone can beat up the data for the quarter and come up with a good story.

Job creation has slowed sharply. We had been creating jobs at a 170,000 monthly rate through 2024.  In the first six months of this year job growth averaged just 130,000 a month. To be clear, this slowing is largely due to the tightening immigration restrictions, which began last June under Biden, but it still translates into slower growth in demand and the economy.

There also is some evidence that wage growth has slowed. The annualized rate of growth, comparing the last three months (April-June) with the prior three (January-March), is just 3.2 percent, down from a 4.0 percent pace in 2024. This averaging is my preferred measure of wage growth, since it reduces the impact of a single month’s data, which is erratic. Nonetheless, the extent of slowing may look different with another month’s data.

There is also some evidence that tariffs are starting to have an impact on inflation. While the Consumer Price Index (CPI) is still relatively tame, the downward trend we saw through 2024 seems to have been reversed. June was the first month where the government collected substantial revenue from Trump’s tariffs, pulling in $26 billion compared to $6 billion last June.

The difference of $20 billion comes to $240 billion annually, which makes it one of the largest tax increases in history. Summing this over ten years, as is the standard in budget calculations, it comes to $2.4 trillion. On a per household basis this comes to $1,900 a year or $19,000 over a decade. That’s real money for most people.

And just to be clear, exporters are not paying the tariffs. If exporters were paying the tariff there would be a fall in import prices. (These are measured before the tariff.) Import prices have been rising this year, pretty much on the same course as last year. That means someone here — the importers, retailers, or consumers — will be paying the tariffs.

The June CPI showed big increases in the prices of apparel, appliances and other home furniture, and audio and visual equipment. These increases did not reflect anywhere near the full effect of the tariffs. This is in part because retailers built up huge inventories in anticipation of the tariffs and are selling down those inventories before raising prices.

The other factor is that many companies, notably auto manufacturers, are waiting to see if tariffs stick before raising prices. They might be willing to absorb smaller margins for a period of time rather than lose market share, but over time, this will almost certainly not be the case if the tariffs remain in place.

The tariffs will be a major drag on demand in the second half of 2025 and beyond, especially if Trump goes through with the higher tariffs he has proposed for August 1.

In this respect, it is worth noting that real wages edged down by 0.1 percent in July. This decline is trivial in itself, but the combination of slowing nominal wage growth from a weakening labor market and higher inflation due to tariffs will dampen or reverse the real wage growth we had been seeing and crimp consumption.

Tariffs will also be hitting manufacturing. Close to half our imports are inputs to production. Tariffs on items used in manufacturing, like Trump’s 50 percent tariff on imported steel, are a big hit to automobile production and other industries. If these tariffs stay in place, the impact of higher costs is likely to swamp any plausible incentive to domestic production from the tariffs.

The Trump tariffs should ensure that the Biden factory boom (real construction was more than twice as high in 2024 than in 2019) fades quickly. The factories that were being built as a result of the Infrastructure bill, the CHIPS Act, and the Inflation Reduction Act, may get finished (some may not), but it is unlikely many new projects will be started in the current environment.

The economic hit from the tariffs will be amplified by the hit from the budget cuts. These are mostly in health care, education, and research. The health care cuts have been well-publicized. The Republican budget projects more than $800 billion in cuts to Medicaid over the next decade, roughly 10 percent of projected spending in the program and a bit less than 1.0 percent of total spending.

While most of these cuts are not supposed to hit until the end of 2026 (after the election), we are already beginning to see their impact, along with the impact of cuts to the subsidies for the Obamacare exchanges. Hospitals and other providers have to budget for the future. They know the revenue they will be receiving will be sharply lower than what they had previously expected.

This means curtailing expansion plans in some cases. In others it means downsizing or even closing. Rural hospitals were already seriously stretched, with over 100 forced to close over the last decade. That process will accelerate due to the Republican cuts, both depriving people of access to healthcare and costing jobs in many communities.

The workers that Trump is deporting will also be a factor here. Many immigrants worked in low-paying jobs in the healthcare sector. Hospitals, nursing homes, and other facilities will struggle to replace them and will almost certainly have to pay more money when they do. This will also accelerate the loss of hospitals and other providers. It is worth noting that healthcare has been by far the leading sector for job growth in the last three years. Budget cuts and the loss of immigrant labor will sharply slow growth in the sector.

The loss of immigrant labor is also likely to cost jobs in construction. While to some extent immigrant workers replaced native-born workers, they often provided a necessary source of labor that allows projects to go forward. The net effect of having fewer immigrants working in construction is likely to be less construction and fewer jobs in the sector for native-born workers.

There is likely to be a similar effect in the hotel and restaurant industry, as the loss of immigrant labor makes it more expensive for these businesses to operate. With the tourism industry already taking a hit due to a plunge in foreign visitors, there will likely be weak job growth in this sector in the second half of this year and beyond.

The loss of immigrant labor will have the largest effect in agriculture. There is no plausible story where native-born workers will substitute for any substantial portion of the immigrants working in agriculture. There are many accounts of farm workers being detained by ICE. Also, many are not coming to work in fear of being arrested.

We will know the impact later this summer as crops, especially fruits and vegetables, go unharvested. This effect will be amplified by Trump’s tariffs, especially the 17 percent tariff on Mexican tomatoes that took effect this month. This will mean higher prices at the grocery store and lower real wages.

Trump’s assault on universities — both by withholding funds to push his “anti-woke” agenda and cuts to research spending — is likely to have a major impact on this sector, which is already being felt. The private portion of the education sector had been adding an average of 7,000 jobs a month in 2024.  It lost 7,500 jobs in June. We are likely to see further job losses through 2025 and into next year, as schools impose layoffs and reduce hiring. Stricter rules on student loans will also have an impact, but that will be more visible next year as fewer people are able to afford school.

There will also be a long-run effect from cuts to universities, as well as the direct cuts in research by the National Institutes of Health and other government agencies. The United States was at the cutting edge in biomedical research and many other areas. This will no longer be true after these budget cuts, as many leading researchers take jobs in other countries. However, this effect will mostly be seen a few years out, as we pay to import technology that we otherwise would have developed here.

The Financial Markets: A Misplaced Focus

There has been much made of the reactions to Trump’s policies in financial markets, especially the plunges in the stock market in response to announcements of big tariff hikes. It seems that the stock market has reconciled itself to high tariffs, although investors may still believe that Trump will back down yet again. Either way, it doesn’t really matter much for the economy.

While the plunge in the markets made for good headlines and lots of hysterics about people’s retirement savings being destroyed, even at its lowest point on “Liberation Day I” the S&P 500 was still almost 70 percent higher than its level of five years ago. In other words, people with 401(k)s still had far more money in the stock market than they had any reasonable right to expect five years ago. The stock market could of course go lower, and since it is very high relative to earnings by historic standards, we may see a serious correction, but the ups and downs from the spring were more theater than anything else.

Many analysts have made a bigger deal out of the movements in the dollar and the bond market, under the assumption that these are driven more by professional investors who understand the fundamentals. The story with the dollar is that investors are fleeing the dollar because they no longer have confidence in the competence of the US government or its commitment to the rule of law. In the case of Treasury bonds, the story is that yields have remained relatively high because investors are concerned that tariffs will lead to inflation. Also, they worry that Trump will eventually gain control of the Fed and demand that it abandon efforts to combat inflation.

There is considerable truth to both of these claims, but the impacts are exaggerated. Holding dollars or dollar assets as a safe haven is not a zero-one proposition. Trump’s actions certainly make dollar-based assets less attractive relative to assets in other currencies, but he would have to take far more extreme measures to cause all investors to flee. Given Trump’s lack of respect for the rule of law, a massive flight is still possible, but the drop to date is not a very big deal.

The dollar is roughly 15 percent lower today than when Trump took office. That is a substantial drop in six months, but it has been lower in the recent past. For example, at the start of 2021 it was around 5 percent lower against the euro than it is today. It is still about 20 percent higher than it was in the summer of 2008. This is a case where the fall should be taken seriously, and if the dollar were to continue to drop at anything like the rate it did in the first half of 2025 it would be a very big deal. But the drop we have seen to date is not catastrophic and not hugely noteworthy, except as a warning, just as the sharp rise in the dollar in 2021 and 2022 did not get much attention.

There is a similar story with the bond market. It would be nice to see a lower interest rate on Treasury bonds than the current 4.43 percent, and the rate would almost certainly be lower if not for Trump’s tariffs and erratic behavior. However, this is not an especially high interest rate. In the late 1990s, when everyone was celebrating Bill Clinton’s budget surpluses, the interest rate bottomed out at just about the same level and was mostly over 5 percent. And with inflation today running well above the late 1990s levels, real interest rates are considerably lower than in our last era of budget surpluses.

The rhetoric around Trump’s budget deficits has been seriously overheated. More tax cuts for the rich are horrible policy, but most of the cost from his tax cuts was due to continuing tax cuts that were already in place. These tax cuts were scheduled to expire, but leaving them in place does not increase current deficits. And the cuts Trump has put in place to research, universities, Medicaid, and other healthcare spending, coupled with substantial tariff revenue, will lead to lower deficits. This may be bad policy in terms of its impact on people now and its longer-term impact on the economy, but the problem is not large deficits.

The Trump Slowdown

Throwing this all together, the Trump policies look like a recipe for a slowing economy, but not necessarily a recession. His policies virtually guarantee the slowing of major growth areas for the economy, specifically healthcare, state and local government, the hotel and restaurant industry, and private colleges and universities. There is no obvious area that can fill the gap this slowing will create.

Trump’s dreams for a revitalized manufacturing sector are largely just dreams. There was the beginning of a surge in clean energy and EV production under Biden, but Trump seems determined to wipe it out. We are not likely to see a jump in fossil fuel production or the manufacture of traditional internal combustion (IC) cars to fill the gap.

At current prices, new drilling for oil and gas is just marginally profitable. Unless prices take a big jump there will not be a noticeable uptick in oil and gas production regardless of how much land Trump opens to the industry. IC cars are expensive. There could always be a modest uptick in consumption, but killing the EV industry will not lead to a boom in demand.

With real wage growth slowing, if not coming to a halt altogether, consumption growth is likely to slow in the second half of 2025 and beyond. Increased payments on student loans will also dampen demand. Also, Trumpian uncertainty is likely to be a major impediment to investment, as businesses have no idea where tariffs will be in a few months or a few years.

Taken together, this seems to be a recipe for a slowing economy through 2025, which could slip into negative growth in 2026. The classic virtuous circle would run in reverse. A weakening labor market would lead to slower nominal wage growth. This would translate into even slower or negative real wage growth as tariffs push prices higher. This would slow consumption, leading to further weakening of the labor market and the pace of nominal wage growth. This is not a story of collapse, but it is also not a happy picture for the economy and working people.

The Possibility of Surprises

It’s hard to see what upside surprises there can be in this story. Maybe the rest of the world will suddenly start to buy American because they are so impressed by Trump’s wisdom, but that hardly seems likely. The more likely prospect is that we see a further hit to demand as our trading partners impose retaliatory measures designed to inflict as much pain as possible. If Trump responds by jacking up our import taxes even higher, look to still more inflation and disruptions to the US economy.

There are some obvious potential downside surprises. The new legislation on crypto is virtually inviting corruption. Regulation of banks has always been problematic. And this is not ancient history. It was just a bit over two years ago that the geniuses running Silicon Valley Bank discovered that bond prices fall when interest rates rise. That bailout cost taxpayers $20 billion. Among the leading advocates for that bailout was David Sachs, Trump’s crypto czar.

A major meltdown of a crypto coin could lead to a panic in the crypto market. If that stays confined to the crypto sector, we can all just pass the popcorn and enjoy the show. But if it spreads to the banking system as a whole, the impact would be hard to predict.

The other obvious risk is a collapse of the AI boom. It is not clear if any of the companies racing to gain the lead in AI technology is actually looking at a pot of gold at the end of the effort. If that becomes clear to investors, as happened with the Internet bubble in 2000, stock prices can fall even more rapidly than they rose.

The plunge in stock prices, which is likely to hit the broader market, coupled with plunging investment in AI, could very well give us a recession. And contrary to conventional wisdom, recessions caused by collapsing stock bubbles can be bad news. While the conventional view of the 2001 recession that followed the collapse of the bubble is that it was short and mild, we didn’t get back the jobs lost for four full years. At the time, that was the longest period without positive job growth since the Great Depression. (It took longer to recover the jobs lost during the Great Recession following the collapse of the housing bubble.) So a collapse of the AI boom could have very serious implications for the economy.

The Immediate Future: Q2 Should be Fine

We will get the GDP data for the second quarter at the end of the month. This is likely to show respectable growth, most likely between 2.0-2.5 percent. The important point to keep in mind in evaluating this data is that it follows a quarter where GDP reportedly fell by 0.5 percent.

Any serious analysis has to average these two together, since they are obviously connected. We will see a big fall in the trade deficit provided a large boost to growth in the second quarter, but that is due to the large jump in the first quarter that subtracted 1.6 percentage points from GDP growth in the quarter. An average growth rate through the first half of 2025 in the range of 1.0 to 1.5 percent does not look very impressive, and as I have argued, there are good grounds for thinking it will go lower in the second half of the year.

The July jobs report is likely to show further weakening. There was an extraordinary jump in state and local government employment in education in June. This was due to faulty seasonal adjustments that will not be repeated in July and may be partially reversed. The July jobs report should make the slowing in job growth more apparent. In any case, the data picture will be much clearer in the next two weeks.

• This article first appeared on Dean Baker’s Beat the Press blog.

Dean Baker

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of Plunder and Blunder: The Rise and Fall of the Bubble Economy.

With Eyes On Sahel, Russia Shifts From Syria To Libya

 July 24, 2025  0 Comments

By Africa Defense Forum

After the fall of Syrian dictator Bashar al-Assad in December 2024, Russia has scrambled to transfer military equipment to other areas, including eastern Libya.

Experts question Russia’s long-term strategic goals and fear the expanded presence of mercenaries and military personnel could further destabilize Libya, Sudan and other nations in the region.

The Kremlin increasingly has used Al-Khadim air base, about 100 kilometers east of Benghazi, as a hub for conducting operations, supplying arms, and trafficking resources in and out of the restive Sahel region.

“One of former Libyan leader Mu’ammar Qaddafi’s greatest foreign policy failures was undoubtedly his 1980s attempt to use his Soviet-armed military to spread Libyan rule and influence in the African Sahel region,” researcher Andrew McGregor of the Jamestown Foundation think tank wrote in an April 17 analysis.

“Now, Russia is focused on a similar effort in the Sahel, using the same remote airbase in south-eastern Libya that Qaddafi used to launch his offensive into neighboring Chad.”

Using satellite imagery, flight logs and radar information, multiple news outlets have traced the movements of Russian military assets from Syria to Libya.

In May, an Antonov-124 cargo plane left a base in Syria and embarked on a nearly 10,000-kilometer journey to Sub-Saharan Africa. Its first stop was Al-Khadim. From there it traveled to Bamako, Mali’s capital, and Burkina Faso’s capital, Ouagadougou, according to flight logs seen by Radio France International (RFI).

Although the type of equipment that was loaded and unloaded during this trip was unclear, the aircraft’s cargo bay is large enough to carry several aircraft or armored vehicles. Russian cargo planes have been known to deliver aircraft, helicopters, radars and surface-to-air systems to Burkina Faso, Mali and Niger, where Russian mercenaries continue to help military juntas maintain power.

Between December 2024 and January 2025, French newspaper Le Monde documented eight flights from Syria to Al-Khadim. RFI reviewed several Telegram messaging app channels linked to Russian paramilitary groups and found references to Russian weapons deliveries to Al-Khadim, including heavy weapons and armored vehicles — the same type used by Russia in Syria.

One video message read: “New organizations. New technology. Old places. Remember your roots!” Moscow’s on-again, off-again ties with Libya pre-date the Cold War. According to RFI, the footage was shot at Al-Khadim.

Lou Osborn, of the All Eyes On Wagner investigative group, said Russia’s presence at Al-Khadim is the product of an effort to bolster ties with Field Marshal Khalifa Haftar, who leads the Libyan National Army (LNA) and has controlled eastern Libya since 2017.

“We saw a kind of logistical ballet of Russian planes towards Libya,” Osborn told RFI. “There is a fairly strong rapprochement, political and military, between Haftar’s Libya and the Kremlin.”

Moscow also has tried to forge ties with the officially recognized government in Tripoli by opening embassies, and it has made overtures to do the same in Algeria and Tunisia. These countries are “very aware of what is happening in the region, with military attachés, particularly in Algeria, who travel back and forth to Libya,” Osborn said.

Russia’s presence in Libya is not limited to Al-Khadim. In December 2024, Russia moved troops from Syria to revive the Matan al-Sarra air base near the borders with Chad and Sudan, according to Italian news Agency Nova. The base had been abandoned since 2011.

Anas El Gomati, director of Libyan think tank the Sadeq Institute, said that disengaging from Syria was just one factor in Russia’s use of the air base.

“Matan al-Sarra isn’t just another airbase renovation, it’s Russia repositioning its chess pieces in Africa,” he told The New Arab website. “The timing is telling: as they lose Syrian bases, they’re rapidly developing this strategic location near Chad’s and Sudan’s borders. But this isn’t about replacing Syria; it’s about creating something potentially more valuable: a new network of influence stretching from the Mediterranean deep into Africa.”

From Maaten al-Sarra, Russia can directly supply Burkina Faso, Mali and Sudan. Russian technicians and troops have restored runways and warehouses at the base. Haftar’s LNA secured the area and protects routes that supply Sudan with weapons and fuel from the northeastern Libya port of Tobruk.

Some members of Libya’s divided government oppose Russia’s activities. Abdul Hamid Dabaiba, prime minister of the Tripoli government, said he rejected any attempt to turn Libya into a center for major-power conflicts and warned that the transfer of Russian weapons to Libya would complicate the country’s internal crisis.

“No one with an ounce of patriotism wants a foreign power to impose its hegemony and authority on the country and the people,” Dabaiba told The Guardian.

Jalel Harchaoui, associate fellow at the defense think tank RUSI, characterized Dabaiba’s remarks as a “watershed moment.”

“Just him saying those words is deeply problematic to Russia because part of the Russian doctrine in the Middle East is never to be perceived as being completely 100% on one side against the other,” Harchaoui told The Guardian. “So Russia was supposed to be this magical actor that was basically eliciting the active approval of both sides of the Libyan crisis. And all of that is gone.”

Africa Defense Forum

The Africa Defense Forum (ADF) magazine is a security affairs journal that focuses on all issues affecting peace, stability, and good governance in Africa. ADF is published by the U.S. Africa Command.