Reuters | February 28, 2025 |
Ukrainian President Volodymyr Zelenskiy in meeting with delegation from the US Senate. Credit: Volodymyr Zelenskiy’s official X account
(The opinions expressed here are those of the author, Andy Home, a columnist for Reuters.)
Ukrainian President Volodymyr Zelenskiy is set to meet with US President Donald Trump today to sign a critical minerals deal as a way of securing continued US backing in the war against Russia.
It initially started as a rare earths deal before someone realized that Ukraine doesn’t actually have too much in the way of these 17 esoteric metals.
The draft text on the proposed Reconstruction Investment Fund therefore simply refers to “deposits of minerals, hydrocarbons, oil and gas”.
Mortgaging Ukrainian security against its mineral wealth comes with a long-dated pay-back.
The clue is in the word “deposits”. Finding mineral deposits is the easy part. Mining them is more difficult. Processing them is more difficult still.
But the deal is a sign that after a century of oil politics we’re now entering a new age of metal politics.
What lies beneath the surface?
If Ukraine has a lot of rare earths, it’s news to the US Geological Survey, which doesn’t include the country in its list of either top producers or largest reserves.
The handful of rare earth deposits that Ukraine hosts haven’t been surveyed since Soviet times.
In mining terms, we don’t even know the size or composition of the resource, let alone whether it could qualify as a reserve deemed economically viable for extraction.
Ukraine does have confirmed reserves of other critical metals such as titanium and lithium but getting them out of the ground is a whole bigger challenge.
Mining requires infrastructure and power, both in short supply in Ukraine after three years of war.
Even assuming any deposits can be mined profitably, there’s the not so little question of how to process raw material into metal.
China dominates so many critical mineral supply chains not because it has the largest ore reserves but because it has mastered the mid-stream part of the production cycle.
It’s also starting to leverage this technical know-how by restricting exports of critical metal processing technology, making it even harder for the West to catch up.
In short, it’s going to be a good while before Ukraine can deliver on its part of the minerals deal by monetizing what is still in the ground.
Metals revolution
China’s dominance is why the United States and Europe are so desperate to secure their own critical mineral supply chains.
But it’s a metallic revolution that is driving that hunger.
A 20th century landline telephone only needed a length of copper wire to work. An Apple iPhone still contains copper but it also needs aluminum, cobalt, gold, lithium, tin, tungsten and a sprinkling of rare earths for you to be able to make a call.
Now consider what goes into a more advanced bit of technology such as an F-35 stealth fighter jet.
Metals are no longer just bits of hard stuff to bang into shape but are used in increasingly complex combinations in what is more akin to inorganic chemistry than traditional metal-working.
The poster-child for modern metallurgy is the lithium-ion battery, which comes in multiple chemistries each using a slightly different combination of metal inputs.
The first commercial battery only appeared in 1991 but the technology has rapidly evolved to become the core driver of the transition to electric vehicles, which is why the West is racing to build out its own battery metals supply chain.
And while Trump may not think much of electric vehicles, he knows how important metals are to the US military. Indeed, it was Trump in his first term who declared critical minerals a national emergency.
Metallic poker
Critical metals have become the new bargaining chip on the geopolitical card table.
Trump has also set his sights on Greenland, which does have accredited reserves, including of rare earths, but which is behind even Ukraine in having the infrastructure to get them out of the ground.
Vladimir Putin has been quick to join the metallic poker game, pointing out that Russia boasts considerably more rare earths than Ukraine if the United States is interested.
He’ll even throw in two million tonnes of primary aluminum a year since he’s heard the United States might be a bit short of the stuff if it goes ahead and puts tariffs on imports from Canada, its largest supplier.
Which rather begs the question of whether Trump may not be better looking closer to home if he’s really that keen on getting rare earths and other critical metals.
Canada has lots of them, is a mining friendly jurisdiction and has extensive metals processing capacity.
But Trump seems to have thrown out the previous administration’s concept of “friend-shoring”. Or maybe it’s the list of friends that has changed.
Either way, the minerals deal with Ukraine is unlikely to be the last of its kind.
As metals become a geopolitical currency, Ukraine is not the only country looking to play the metals card.
The Democratic Republic of Congo is trying and failing to fight back the M23 rebel group, which has seized the two largest cities in the east of the country.
The country’s president Felix Tshisekedi touted a Ukraine-style deal in an interview with the New York Times, offering future supplies of the country’s critical minerals, particularly cobalt, for Western assistance.
Such is the new age of metals diplomacy.
You’re going to be hearing a lot more about a bunch of elements in the periodic table that you’ve never heard of, even though you’re using them every day.
(Editing by Christina Fincher)
As Trump and Zelenskiy clash, Ukraine minerals bonanza remains distant prospect
Reuters | February 28, 2025 |
On snow-covered fields in central Ukraine, where some of the country’s biggest proven lithium deposits are located, a small team of ecological consultants drop sensors into holes in the earth to measure water levels.
The environmental survey, contracted by the small Ukrainian mining company that holds the license, UkrLithiumMining, comes years ahead of any mining operations at the undeveloped site.
It underlines how much work is still to be done before a much-vaunted minerals deal between Ukraine and the United States generates significant revenue for either side.
President Donald Trump sees the minerals deal – which he is due to clinch on Friday with President Volodymyr Zelenskiy in Washington – as America’s way of earning back some of the money it has given to Ukraine in the form of financial aid and weaponry to help fight Russia, which invaded three years ago.
For Denys Alyoshin, chief strategy officer of UkrLithiumMining, the Washington agreement is a step in the right direction because US engagement makes Ukraine less vulnerable to Russian aggression in the longer term, he said.
But without some form of Western security guarantee developing the Polokhivske lithium deposit would be tough, he said. The deposit – one of the largest in Europe – is located just 240 km (149 miles) northwest of the frontline with Russia.
“Before the war broke out, I had a lot of commercial negotiations with … investors who were interested in the project,” Alyoshin told Reuters. “But when the war started … a rational CEO would not go to a country where there is a war, they would go to Zimbabwe, Canada or Africa. There are many places to go where there is no war.”
Despite repeated requests from Zelenskiy, the Trump administration has offered Kyiv no security guarantee. That has raised doubts over the commercial feasibility of developing deposits of rare mineral resources, used in high-tech devices and batteries, given the risks of a return to war even if a ceasefire is agreed with Russia this year.
A draft of the minerals deal, reviewed by Reuters, contained reassuring language but no guarantees of security. It focused instead on the creation of a joint US-Ukraine managed “Reconstruction Investment Fund” to which Kyiv will contribute 50% of revenues of future monetization of state-owned natural resources.
Furthermore, the terms of the deal are broad and further negotiations will be needed to pin down details, four experts told Reuters.
Even if a lasting peace returns to Ukraine, UkrLithiumMining needs to raise $350 million and requires at least 1.5 years to conduct a feasibility study before it can start building a mine and enrichment plant, Alyoshin said.
“It means we will be able to reach steady stage production … it can be 2029.”
The next US presidential elections are due to take place in 2028, and Trump, the champion of minerals cooperation as a means of securing peace, would be constitutionally barred from running again, having served one term already.
However, seven mining executives and industry analysts told Reuters that Alyoshin’s timeline is optimistic. Exploration periods are typically four years; a feasibility study would take another year before the construction of a processing plant can even begin.
“The reality is that most lithium deposits in Ukraine were identified in the Soviet era and we haven’t had any real updates or exploration for many years,” said Federico Gay, analyst at Benchmark Mineral Intelligence (BMI), a London-based specialist information provider for the supply chain of lithium-ion batteries used in electric vehicles.
“Even if everything stacks up, it would take a minimum of eight years for the Polokhivske deposit to be developed to the stage where it is producing usable lithium,” he said.
Moreover, the deposit is deep and may require up to $800 million just to construct the mine and concentrator, said Gay, who added that another $1 billion investment would likely be needed to produce the lithium compounds needed for batteries.
Despite the challenges, Alyoshin said his company eventually planned to produce about 1.5 million tonnes of raw ore a year and process that into 300,000 tonnes of petalite concentrate – a more lithium-rich substance.
With additional investment, Alyoshin added the concentrate could be further refined to produce 22,000 tonnes of battery-grade lithium carbonate.
The specifics of planned production and processing timelines at the Polokhivske deposit have not been reported previously.
Classified reserves
Demand for the minerals is high. Lithium is used in electric vehicle batteries, while rare earths are used in everything from auto motors to wind turbines to advanced military weapons systems.
But turning Ukraine’s reserves of lithium and rare earths into operating mines and constructing processing facilities is a mammoth undertaking, according to more than 10 analysts and mining industry experts.
Ukraine’s economy ministry and the prime minister’s office did not immediately respond to requests for comment for this article.
Ukraine does not produce any rare earths but, according to Ukraine’s Institute of Geology, possesses large deposits of such minerals, including lanthanum, cerium, neodymium and yttrium. Detailed data about those reserves is classified.
Private investors might be wary of a deal in which the US received mined minerals in return for security guarantees, protection from future Russian attacks and aid. The mining industry would normally use royalty deals as a way to get financing from investors in return for a percentage of revenues from sales once production begins.
Any deal by Trump to access Ukraine’s critical minerals won’t get the United States anywhere close to challenging China’s sizeable advantage in those key minerals, while he is in power.
“Yes, it’s a counter to China, but you’ve still got the problem of where the minerals are going to be processed and how long it’s going to take,” said Julian Kettle, vice chair, metals and mining at natural resources consultancy Wood Mackenzie.
“Ukraine produces titanium and it has extensive graphite and lithium deposits. You can expand production at existing mines. But when it comes new frontier development, discovery to delivery of material could take up to 10 years.”
China is already the world’s third-largest lithium producer, after Australia and Chile. It is also the world’s top producer of rare earth elements, which include neodymium used to make strong, light, powerful permanent magnets used in defense equipment.
US Geological Survey (USGS), a government agency, does not provide details of lithium production in the United States. It estimated 45,000 metric tons of rare earth oxides in mineral concentrates were produced last year – which would make the US the second-largest concentrate producer after China.
But the gap is large. According to USGS, China mined 270,000 metric tons of rare earth elements last year or 69% of the global total. And it has an even tighter stranglehold over the processing of rare earths – a complex and polluting process.
Many companies that mine rare earth minerals still have to send their concentrate to China to be processed, meaning Beijing produces more than 90% of the world’s rare earth elements.
More negotiation to be done
Dominic Raab, head of global affairs at Appian Capital Advisory, a private equity firm that invests in mining companies, said he viewed the deal between the US and Ukraine as a positive step forward in helping fund Ukraine’s redevelopment.
“There’s plenty more due diligence and negotiation to be done,” said Raab, who previously served as former deputy prime minister and foreign secretary for the United Kingdom.
Appian would be interested in investing in Ukraine’s minerals projects were there more information on the country’s geological potential, Raab said.
Ukraine has deposits of 22 of the 50 minerals classified as critical by the US government and has significant deposits of lithium, graphite, titanium, uranium used to generate nuclear power, alongside rare earth elements, according to BMI.
“Ukraine hasn’t been mapped in 30 years. There’s so much more to be done before we get to a phase of advanced exploration in Ukraine,” said Gracelin Baskaran, director of the critical minerals security program at the Center for Strategic and International Studies, an American think-tank.
But she said that mining – which consumes around one-fifth of energy globally – required robust electricity infrastructure: “Ukraine has been bombed out. It’s not really a competitor given the state of infrastructure and a huge security risk.”
(By Pratima Desai, Olena Harmash, Thomas Peter and Ernest Scheyder; Editing by Veronica Brown, Mike Collett-White and Daniel Flynn)
Op-Ed: Unpacking Ukraine’s “trillion dollar” rare earths myth
Amanda Marziliano van Dyke | February 26, 2025 |
State mining and metallurgical plant in the Ukraine. Image by Khorzhevska, adobe stock.
(The opinions expressed here are solely of the author, Amanda Marziliano van Dyke)
Mark Twain reputedly defined a mine as a hole in the ground with a liar on top. The “Value in the Ground” myth has been around the mining industry for a very long time, and it is repeated whenever disreputable hucksters try to sell overpriced dirt.
When the value in the ground is ultimately proven to be a lie, people trust the mining industry less, rather than the people who were peddling the lie trying to make a buck.
Catherine Philp penned an article titled “Ukraine rejects Trump’s call to give up its rare earth minerals” in The Times on Sunday. Among the many misrepresentations in that article is “Ukraine’s vast steppe hides precious mineral reserves valued at several trillion dollars, from the most highly prized rare earths to the more common titanium and graphite used in modern consumer goods.”
Let me unpack the multiple lies hidden in this one sentence, and explain why they are so dangerous.
Reserves are what you get when you have proven with drilling and an independent audit both what your geological resource in the ground is, and when you have a proven economically viable plan to extract them.
The best authority in the world on resources and reserves is the US Geological Survey (USGS). Ukraine does not have resources (the scientifically confirmed presence of minerals) or reserves (resources that are economically extractable).
To my knowledge, and the knowledge of everyone in the mining industry I have asked, there are no economically relevant large scale drilled out resources or reserves in Ukraine of rare earths, graphite, or titanium.
What they have are old Soviet survey’s that indicate the presence of trace amounts rare earth minerals, and a general line that says the entire region could contain rare earth minerals.
What they have in mining terms is exploration targets. 1/1000 exploration targets ever becomes a mine. To get reserves, which are the only thing that can be valued, 100’s of millions in drilling investment is required. Which is why in economic terms the value of Ukraine’s economic potential is negative right now, it requires highly speculative risky investment to ever be realised.
My understanding is that last November the Ukrainian government, desperate to maintain support found those old soviet surveys and claimed those exploration targets were reserves, did some very bad math, and ascribed a ludicrous value to them.
So the question is, is it possible Ukraine has trillions of dollars of rare earths? It is highly unlikely. Let me show you why.
The Times author is asserting that the value of these minerals in the Ukraine is greater than the entire value of all the mined ore in the world, which in 2024, was a little over than 2 trillion dollars (statista), and 50% of that was coal.
In 2024 the world mined 280,000 tonnes of natural graphite worth approximately $280 million, 9.4m tonnes of titanium mineral concentrate worth approximately 3B, and 390k tonnes of rare earth concentrate worth approximately 15-19.5B, which makes the approximate extracted value of all of them combined, circa 20B dollars, and approximately 1% of the entire value of mineral extracted value in the world.
Which makes the idea that Ukraine even could contain “several” trillions of dollars worth of these minerals preposterous. Realistically, if they did in fact at some point prove up 1,000 times the annual production of rare earth minerals in one spot, that are economically extractable, they would crash the price of rare earth minerals forevermore. (source: USGS and World Mining Data 2024).
By attributing such ludicrous value to exploration targets and resources, all this journalist and Ukraine have done is ensure that nobody will ever invest the money into developing those resources.
When you anchor the idea of “trillions” of dollars, both the government and the people in the area believe they have something they don’t, and no matter how many people explain to them that it was a lie to begin with they will always have this false idea in their head of a value that is completely unachievable, and will never come to a reasonable arrangement with investors to develop whatever assets those people might have.
All they have done is created a delusional fantasy of value that doesn’t exist and ensured that the sustainable economic development of the mining industry of the region they are in never happens.
If in fact the lie there are trillions of dollars worth of rare earth minerals in Ukraine prevails, (and the thousands of hits “trillions” in rare earth minerals in Ukraine has is mind boggling), money will be invested, and lost. And the loser will be the mining industry because it will be blamed.
It is within the interests of every mining industry executive who has any kind of access to the US administration to tell the truth about what has happened here before this goes any further.
This has happened before, the Pentagon suggested there were trillions of dollars in lithium in Afghanistan, which has never been realized.
It’s a cautionary tale one we would be wise to consider.
