Reuters | February 12, 2025
Credit: Zavallivsky Graphite
At the 90-year-old Zavallivsky graphite mine in central Ukraine, CEO Ostap Kostyuk dreams of making graphite pure enough to use for lithium batteries, something he compares to trying to “make a Rolls-Royce inside a garage”, given the lack of investment.
As US President Donald Trump eyes a major deal on Ukraine’s rare earths and critical minerals in return for Washington’s continuing support in the war against Russia, operators such as Kostyuk, sitting on one of Europe’s largest graphite deposits, see an opportunity – but acknowledge profits will not come quickly for any American investors.
“No matter what, it’s a long-term investment,” said Kostyuk of the challenges extracting minerals in Ukraine.
During a recent visit, he showed Reuters the sprawling facility in the Kirovohrad region, standing among ageing heavy machinery where every surface was coated in a thin layer of graphite that rubbed off to the touch.
Ukraine’s vast undersoil mineral wealth is at the heart of a joint partnership pitch made to Trump by President Volodymyr Zelenskiy who wants security guarantees as part of a deal to end the war.
Trump, in response, has said he wants $500 billion worth of Ukrainian critical resources and dispatched his Treasury Secretary Scott Bessent to Kyiv to meet Zelenskiy this week.
Vast mineral wealth
In an interview last week, Zelenskiy unfurled a map of Ukrainian minerals, including lithium, graphite, titanium and rare earths, which are important for the manufacture of high-performance magnets, electric motors and consumer electronics.
He said less than 20% of the country’s resources – including about half its rare earth deposits – were under Russian occupation and emphasized the need to help Ukraine protect what remains.
But despite what Kyiv says is trillions of dollars of untapped mineral wealth, industry experts say it could take years for investors to make significant profits from a sector reeling from war and chronic underinvestment.
Volodymyr Landa, a senior economist at the Centre for Economic Strategy, said it was important to understand what specifically the United States was interested in gaining access to.
Ksenia Orynchak, head of Kyiv’s National Extractive Industries Association, said the mining industry had “stagnated” and lacked inflows of money for all the nine years she has worked in it.
At the State Service of Geology, where she worked from 2017 to 2019, she said the government allocated just a few million hryvnia for all the body’s activities, at a time when simple geological exploration would cost 2 billion hryvnias ($48 million).
Orynchak said another problem was that the country’s mineral reserves have been classified for more than two decades, making it impossible to accurately assess what Ukraine has.
Soviet-era machinery
The Soviet-era Zavallivsky complex, whose equipment was last modernized in 1965, illustrates the scale of the challenge.
Though the mine is hundreds of miles from the front, it has been scrambling for resources since Russia’s February 2022 full-scale invasion prompted its Australian partner to pull its financing.
A number of Kostyuk’s workers are also either serving in the military or were killed fighting for Ukraine.
Despite the setbacks, he said his plant is already making a product good enough to be later purified into battery-ready spherical graphite (SPG).
“We are ready for this technology,” said Kostyuk, adding that his facility’s goal was to eventually produce its own SPG.
Ukraine’s reserves of graphite, a key component in electric vehicle batteries and nuclear reactors, represent 20% of global resources.
More immediately, he added, his company was ready to offer US consumers a supply of natural flake graphite, in part to establish a Ukrainian brand on US markets, while US firms probe for new deposits in Ukraine.
New digging projects – whether for graphite or other critical minerals – could take at least five to seven years before they begin to produce, he added.
While his factory badly needs an upgrade, Kostyuk said his workforce has the know-how to leap forward if given the resources.
“I believe in this factory, I believe in these people,” he said. “Everybody here wants to work.”
($1 = 41.8330 hryvnias)
(By Thomas Peter, Vladyslav Smilianets, Dan Peleschuk and Pavel Polityuk; Editing by Tom Balmforth and Alex Richardson)
Trump official says minerals deal will give Kyiv post-war ‘security shield’
Reuters | February 13, 2025 |
Ukraine’s President Volodymyr Zelensky, US Treasury Secretary Scott Bessent meet in Kyiv on Feb. 12. Image source: Office of the President of Ukraine
US Treasury Secretary Scott Bessent said on Wednesday that a minerals deal between Kyiv and Washington would provide Ukraine with a post-war “security shield”, and President Volodmyr Zelenskiy said he hoped to reach an agreement within days.
Bessent, the first cabinet-level official on Donald Trump’s team to visit Kyiv, spoke after Zelenskiy said he was ready to do a deal to open mineral resources to US investment, as he vies for the US president’s backing in the war against Russia.
Trump, who wants a rapid end to the war but has not made clear if he will continue vital military aid to Kyiv, has said he wants $500 billion in rare earth minerals from Ukraine and that Washington’s support needs to be “secured”.
Zelenskiy told reporters that the United States had on Wednesday presented Ukraine with a first draft agreement, which Kyiv would now study, and that he hoped they could seal a deal at the February 14-16 Munich Security Conference.
“We had a productive, constructive conversation. For me, the issue of security guarantees for Ukraine is very important, and we talked about minerals in general,” said Zelenskiy, who is expected to meet US Vice President JD Vance in Munich.
Bessent said the minerals deal was part of a “larger peace deal that Trump has in mind”, adding that his first visit to Ukraine showed that the war was a top priority for the Trump administration.
“By increasing our economic commitment through a partnership with the government and people of Ukraine, that will provide – once this conflict is over – it will provide a long-term security shield for all Ukrainians,” Bessent said.
Though firm details are still unclear, that message will be welcomed by anxious Ukrainians watching nervously at how the Trump team has been engaging with Russian President Vladimir Putin.
Not long after the conclusion of the joint news conference, Trump wrote on social media that he had had a “lengthy and productive phone call” with Putin to discuss ending the war.
Zelenskiy has emphasized throughout the war that Ukraine needs its Western allies to provide it with security guarantees that would prevent Russia using any break in the fighting to regroup and launch another invasion later on.
Zelenskiy said at the news conference that he could only discuss the subject of US security guarantees for Ukraine with Trump directly.
Pre-dawn missile strike
Bessent’s visit came hours after Kyiv’s residents were awoken by a pre-dawn Russian ballistic missile attack that killed one person in the city as the sound of explosions rang out.
The prospective minerals deal shows how Ukraine has rapidly reset its foreign policy approach to align with the transactional world view set out by the new occupant of the White House, Ukraine’s most important wartime ally.
Trump’s decision to send his treasury secretary before any other official was striking in a wartime capital that has been a revolving door for Western security, defence and political officials over almost three years of war.
Bessent has said he supports ratcheting up sanctions on Russia’s oil sector, a move begun by the Biden administration shortly before leaving office.
As fighting rages in eastern Ukraine, where Russia has been advancing for many months, the visit is the first in a series of important diplomatic tests for Ukraine, including at the Munich Security Conference which Keith Kellogg, Trump’s special envoy for Russia and Ukraine, is due to attend.
On Monday, Russia’s point man for relations with the United States said that all of Putin’s conditions must be met in full before the war in Ukraine could end, suggesting Moscow is playing hardball with Trump.
Those conditions include Ukraine dropping its NATO ambitions and withdrawing its troops from the entirety of the territory of four Ukrainian regions claimed and mostly controlled by Russia, something Kyiv has likened to capitulation.
(By Tom Balmforth, Max Hunder, Yuliia Dysa, Gram Slattery and Andrea Shalal; Editing by Gareth Jones and Mike Collett-White)
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