Ukraine’s Mineral Deal Dilemma
By Nikola Mikovic
Although the honeymoon between Ukraine and the United States appears to be over, Kyiv still hopes to reach a minerals deal with Washington and give the world’s only superpower effective access to its energy resources. Despite the recent spat at the White House between US President Donald Trump and Ukrainian leader Volodymyr Zelensky, the revival of negotiations between the United States and Ukraine seems to be a matter of time. But what exactly can the Eastern European nation offer to the Trump administration?
Ukraine is believed to have 19 million tons of proven reserves of graphite, 7% of Europe’s supplies of titanium, as well as a third of all European lithium deposits. Reports suggests that it also has beryllium, uranium, copper, lead, zinc, silver, nickel, cobalt and manganese. The problem, however, is that some of these natural resources are located in territories currently under Russian control.
Since 2014, when the Donbass war broke out, Russia has established de facto control over Ukraine’s mining sector. Ninety percent of the Eastern European nation’s coal is believed to be in the Donets coal basin — the Donbass. Over the years, the Moscow-backed self-proclaimed Donetsk People’s Republic has been exporting coal to Russia, which Kyiv then bought from Moscow. Ukraine was, therefore, purchasing de jure its coal from its archenemy, while Russia was exporting the Donbass coal to other countries as well, namely to NATO member Turkey.
Putin’s recent statement that Russia is ready to offer cooperation to the United States on rare earth metals, including in the Donbass and Novorossiya, suggests that Trump has a good chance of ensuring access to both Ukrainian and de facto Russian natural resources. It remains unclear if he will manage to also secure an arrangement that will allow the US to tap into Crimea’s huge offshore gas and oil reserves, given that Putin did not explicitly mention the region Moscow incorporated into the Russian Federation in 2014.
No Investment Will Occur Without a Ceasefire
I don’t think it’s a coincidence that Russia is occupying areas with rare earth minerals in Ukraine and has offered the US a deal for both Russian and Ukrainian rare earth minerals.
Courage Kimber, Strategic Advisor, told Scoon TV in an interview, emphasizing that the Kyiv School of Economics (KSE) estimates that Russia occupies 33% of Ukraine’s rare earth minerals.
From her perspective, many of the minerals cannot be properly mined because of the lack of adequate infrastructure and Russian occupation. Also, as she sees it, further exploration would be needed to determine both the accessibility and the profitability of the rare earth minerals in Ukraine. But that is unlikely to happen as long as hostilities go on. Fully aware of that, Trump repeatedly insists on a ceasefire deal between Moscow and Kyiv, as that would allow US corporations to get involved in the mining business in Ukraine.
There is no doubt that getting minerals out of the ground will be a big challenge for American companies. Moreover, it is rather questionable whether they will first have to invest dozens, if not hundreds of billions of dollars into potential extraction. S&P Global estimates indicate that it takes almost 16 years before a mine achieves profitability, which means that the United States would have to wait for a long time to see a return on investment.
It’s going to be done through a cooperative fund, so most likely the contracts and initial proceeds would be enough to fund the excavation project for centuries.
Bob Bilbruck, Founder and CEO of the technology and strategic consulting firm Captjur, told Scoon TV. In his view, “the world runs on rare earths” as they are in high demand and prices are going up every quarter, which means that they are only going to increase in value. Bilbruck stressed,
In the future, mining off Earth will be much more expensive. Mining in Ukraine will be a steal compared to mining an asteroid in comparative costs.
Does Ukraine Really Have Rare Earths?
On the other hand, Laura Lewis, a university distinguished professor of chemical and mechanical engineering at Northeastern, questions the very existence of rare earths in Ukraine. She believes that the evidence for the Eastern European country having rare earths is derived from the Russia-conducted reports that are at least 50 years old.
“There really is no significant evidence that Ukraine has them. If they do, and they say that they’re going to now develop this resource, it would require creating a mine, and the mine could take 15-20 years to build. But I do not think rare earth resources will be developed from Ukraine in the short- to mid-term timeframe,” Lewis concluded.
According to Courage Kimber, the consensus among geological experts such as Elena Safirova, a Ukraine specialist at the US Geological Survey, is that the war-torn nation has rare earth minerals but no active commercial mining exists to extract them.
“I believe the real question is how viable are Ukraine’s rare earth mineral deposits. There is no guarantee of viability in the mining industry, ” Kimber emphasized.
But even if Ukraine is really so rich in natural resources, and if they can be extracted profitably, it is unclear why no other foreign power has shown any interest in these minerals?
Other countries have shown interest, but Trump is the only one bold enough to try and carve out a bigger deal. Also let’s face it: no other nation is in a position to make this deal with Kyiv. Russia is currently in a war with Ukraine, so I would say it is showing interest in controlling these materials by default. China, on the other hand, has plenty of its own minerals already.
Bilbruck explains, claiming that the United States, Russia, and China – the three major world powers – are already making a play.
It is no secret that China currently controls more than 69% of global rare earth production, which means that Washington sees Beijing, rather than Moscow, as its major geopolitical and geoeconomic rival. Fully aware of that, some Russian analysts take the view that the US long-term goal is to “turn Russia against China” and use Moscow as an instrument against Beijing. Could that be one of the reasons why Donald Trump decided to halt military aid to Ukraine, and why he wants to normalize relations with Russia?
“You have to think like Trump. He wants something of value, not only for the repayment of what has already been given, but also to continue supporting Ukraine. He wants upside, and the minerals deal with Kyiv gives upside,” the Captjur concluded.
Indeed, if Ukraine and the US eventually sign a minerals deal, and Kyiv agrees to freeze the conflict, the Trump administration might resume its weapons supplies to Kyiv. However, the path forward remains uncertain, as Kyiv and Washington are not the only actors in this game. Even if Zelensky changes his mind, and accepts Trump’s peace proposal, there is no guarantee that the Kremlin will do the same.
Thus, the future of a potential US access to Ukraine’s natural resources depends not only on Volodymyr Zelensky and his European backers, but also on Putin and Russia’s ruling elite.
