Ukraine holds about 5% of the world’s mineral deposits and has other potentially valuable natural resources, but exploiting them could prove to be much harder than simply staking claim to it.
News broke on Wednesday that US President Donald Trump had succeeded in securing a deal to gain access to Ukraine’s raw resources with Ukrainian President Volodymyr Zelenskyy, after putting exerting mounting pressure on Kyiv. The agreement reportedly would pump at least some of the revenue from the country’s energy carriers and other raw assets into a ‘reconstruction investment fund’ for the country’s post-war reconstruction.
Ukraine’s mineral sector has “high risks and high rewards”, Volodymyr Landa from Kyiv think tank Centre for Economic Strategy told the Guardian. The country’s reserves, though estimated to be worth $14.8 trillion, remain mostly undeveloped largely because, according to Landa, accessing the resources is either not practically or economically feasible or “due to political instability”.
Instability is putting it delicately, given the all-out war invading Russian forces continue to wage. More than 50% of Ukraine’s mineral resources are believed to be located in territory occupied by Russia in eastern and south-eastern Ukraine, according to a report from Britain’s The Independent newspaper. It remains entirely unclear whether or how the Trump administration might seek to take control of these assets, after seemingly abandoning any calls to Moscow to withdraw troops from occupied Ukraine.
At risk of falling under occupation
Before the 2022 Russian invasion, Ukraine was the world’s 10th largest producer of iron ore, and it sits on considerable reserves of titanium, manganese and graphite, as well as 500,000 tonnes of lithium.
The lithium deposits alone are among the largest in Europe, but have yet to be exploited – and are currently at risk of falling under Russian control as attacks continue to make progress along the front.
Ukraine’s deposits of light and heavy rare earth elements have been promoted by Zelenskyy as a means to drive investment and generate revenue in the past, but the exact volume of reserves remains undisclosed.
All of these materials play a critical role in the production of batteries, turbines and weaponry, and are included on the EU’s list of 30 critically important raw materials.
No room for energy giveaways
Energy sources make up another significant part of Ukraine’s riches, and of the drafted ‘Bilateral Agreement’ between the United States and Ukraine. In theory, the country possesses 34.375 billion tonnes of coal, 1.104 trillion cubic metres of natural gas and an estimated 395 million barres of crude oil, according to CIA data that dates from before the Russian invasion.
Crude oil is being extracted but is no longer being refined in Ukraine at a significant scale, as refining infrastructure has been badly worn down by age as well as damage from the current war. A substantial part of the country’s coal mines, meanwhile, are located in the separatist eastern Donbas ‘republics’, which have now been under the control of Russian-backed separatists and Russian troops for a decade.
But it’s not only the lack of Ukrainian military control that makes it extremely difficult to slap a ‘for sale’ sign on the country’s natural resources.
Natural gas and coal account for substantial shares of Ukraine’s domestic energy production, coming in second and third after nuclear power, meaning that little is available for export. “The current situation in Ukraine’s energy sector requires that every megawatt of available thermal generation capacity be ready to cover electricity demand”, Kyiv think tank Dixi Group stated in a recent report focused on the domestic importance of coal.
If the US and Ukraine are indeed about to forge a deal on rebuilding the country following a possible peace deal, then poking further holes into its precarious energy supplies would seem very much at odds with the goal.
[BTS]
