Ukraine’s mineral wealth has been thrown into the spotlight as US President Donald Trump looks to seize control of its resources in return for military support. Yet very little is actually known about what’s up for grabs.
Various reports have suggested that Ukraine has mineral deposits worth upwards of $10 trillion, and President Volodymyr Zelenskiy’s government has been keen to promote crucial materials that can be exploited as it seeks more military and economic support.
Rare earth elements — which play a key role in defense and other high-tech industries — have become a particular focus for Trump as he seeks to secure supplies of critical minerals. The President said last week he wanted the equivalent of $500 billion worth of rare earth.
But Ukraine has no major rare earth reserves that have been internationally recognized as economically viable. While the country has reported a series of deposits, little is known about their potential — most of them appear to be by-products of producing materials like phosphates, while some are in areas of Russian control.
“Rare earths are so niche that they typically don’t produce the more detailed studies publicly, so there’s just not enough information,” said Willis Thomas, principal consultant at CRU Group.
The market for rare earths — which are mainly used in high-strength magnets — is minuscule compared with commodities like copper or oil. The numbers are still small even if other key specialty minerals found in Ukraine are added to the mix: Last year, the US imported about $1.5 billion of rare earths, titanium, zirconium, graphite and lithium combined, according to Bloomberg calculations based on data from the US Geological Survey.
Information on Ukraine’s rare earth deposits have primarily been drawn from government data, and even the former head of the country’s geological survey said that there had been no modern assessment of the countries resources, S&P Global reported last week.
Even if Ukraine does have any economically viable deposits, the West still has a bigger challenge to overcome — mining them is relatively easy, but processing the raw material is much harder.
China accounts for roughly 60% of mined supply, but crucially about 90% of separation and refining capacity. Beijing has also flexed its muscles in recent years as tensions ratcheted up with the US over access to semiconductors.
Any deal with Ukraine “doesn’t really solve that pain point,” Thomas said. The US “still needs to have a value chain that is primarily ex-China that is separation and magnet making and this simply doesn’t exist at this point.”
Western miners have largely failed to build their own rare-earth businesses, stifled by environmental issues, processing challenges, extreme price volatility and the difficulties in competing with Chinese producers.
For example, Australia’s Lynas Rare Earths Ltd., one of the few producers outside of China, has been dogged by concerns over radioactive waste and community opposition to a processing plant in Malaysia.
In the US, Molycorp Inc. dominated the industry there before collapsing. Its successor MP Materials Corp., which operates the Mountain Pass project in California, was criticized in the past for sending raw materials to be processed in China. Washington has provided funding to both Lynas and MP to develop processing in the US.
How rare?
Like many critical minerals, rare earths are relatively abundant globally, but don’t often exist in large enough concentrations to be extracted and refined economically. Outside of China, the largest reserves are found in Brazil, India, Australia, Russia, Vietnam, and the US, according to the USGS.
Rare earths play a key role in defense and other high-tech industries, being used in everything from iPhones to laser-guided missiles. A F-35 fighter jet requires more than 900 pounds of rare earth elements, while each Virginia-class nuclear submarine contains 9,200 pounds, according to the US Defense Department.
Ukraine had not received much interest before Russia’s full-scale invasion from the world’s biggest mining companies, who’ve spent much of the last two decades scouring the globe for untapped metal deposits.
The country’s main established miner is Ferrexpo Plc, a London-listed iron ore company that produces some of the highest grade pellets used to make steel. Steelmaker Metinvest BV mines coal and iron ore. The country also produces uranium.
Trump’s interest
Trump has made securing resources for the US and tackling China’s dominance of certain raw materials a cornerstone of his foreign policy so far. He has targeted Panama over access to its crucial waterway, homed in on Greenland’s mineral riches — mooting a potential takeover of the Danish territory — and now linked securing Ukraine’s resources as a key part of ongoing support in its war with Russia.
Ukraine has also been keen to promote its lithium, graphite and titanium deposits.
The country says it has the Europe’s biggest deposit of lithium, a material that is abundant around the world. Demand has surged because of its crucial use in rechargeable batteries, but production has risen far ahead of demand and prices have crashed in recent years.
In the case of titanium, Ukraine isn’t necessarily producing the form that America’s defense industry needs. Ukraine is a top-ten producer of two titanium-bearing minerals called ilmenite and rutile, and in the US, 95% of those materials are used to make a common white pigment. Ukraine has no capacity to produce titanium sponge, the form of the metal used in jet engines, armor plating, and other defense applications, according to USGS data.
“Titanium, the ilmenite and rutile, the main raw materials there, they’re found across the world and it’s really about ease of extraction, ease of processing and how easily it is shipped,” said Thomas.
(By Thomas Biesheuvel and Mark Burton)
