US President Donald Trump is advocating for an agreement that would allow the United States to access Ukraine‘s rare earth minerals in exchange for American assistance as Kyiv continues its conflict with Russia. Ukrainian President Volodymyr Zelenskyy has reportedly shown a favorable response to this initiative.
Trump highlighted the nearly US$300 billion in support from the US, stressing the importance of “equalization.” He remarked, “Ukraine possesses highly valuable rare earths,” suggesting a possible arrangement where resources are exchanged for aid.
“We aim to establish a deal that ensures Ukraine receives what we provide in return for their rare earths and other resources,” he noted, while leaving the term “other resources” undefined. “We are determined to put an end to that absurd war,” he stated.
In his response, Zelenskyy expressed a willingness to accept “investment” from allies, provided it bolsters Ukraine’s efforts against Russia. He confirmed that conversations regarding rare earth minerals had begun several months prior. “I mentioned this back in September during my meeting with President Trump,” he disclosed.
Notably, Ukrainian media previously indicated that the concept might have originated in Kyiv rather than Washington, aimed at securing ongoing US military support. Reports suggest that Zelenskyy’s team even postponed a crucial minerals agreement with the Biden administration to leverage it in the event of Trump’s return to power.
Recent reports indicate a significant development: Moscow has reportedly taken control of approximately 70% of Ukraine’s mineral resources, with the most valuable deposits found in the occupied territories of Donetsk, Dnipropetrovsk, and Luhansk.
What Lies Beneath Ukraine’s Surface?
What valuable resources lie beneath Ukraine’s conflict-affected land that have captured international interest? The country is endowed with a wealth of critical minerals, positioning it as a potential leader in the global raw materials sector.
Ukraine is abundant in critical minerals and rare earth elements that are vital for a range of modern technologies, including batteries, magnets, catalysts, and electronic components. These resources are essential across various industries such as consumer electronics, healthcare, transportation, energy production, petroleum refining, and defense technologies.
The nation is known to possess 20 critical minerals and metals, making it one of the top ten suppliers globally, accounting for about 5% of the world’s total supply.
Among these resources are rare earth metals such as titanium, lithium, beryllium, manganese, gallium, uranium, zirconium, graphite, apatite, fluorite, and nickel, as reported by the World Economic Forum.
According to the Ministry of Ecology and Natural Resources of Ukraine:
Titanium: Ukraine is the leading country in Europe for titanium reserves and ranks among the top ten worldwide, contributing 7% of the global supply. With 28 identified fields, it also produces zirconium as a byproduct. The primary titanium minerals are ilmenite and rutile.
Lithium: The country holds one-third of Europe’s lithium reserves, which accounts for nearly 3% of the global supply.
Graphite: Ukraine has 20% of the world’s graphite resources, with reserves estimated at around 19 million tons of ore containing 5-8% natural graphite, placing it among the top five holders of global reserves.
Nickel and Cobalt: Ukraine possesses 12 silicate nickel fields, which also yield cobalt as a secondary product. The estimated cobalt reserves in the country reach up to 9,000 tons. Nevertheless, the Pobuzhsky ferronickel plant in Ukraine continues to depend on the importation of nickel and cobalt raw materials to meet its industrial requirements.
Rare Earth Elements: The country is also rich in rare earth metals, including tantalum, niobium, and beryllium, with six known fields containing these elements. Non-commercial extraction occurs in conjunction with titanium mining activities.
Additionally, Ukraine ranks significantly in the production of other minerals, holding the 4th position in copper, 5th in lead, 6th in zinc, and 9th in silver, as reported by the Finance Ministry.
For example, the identified reserves of lithium and graphite in Ukraine are adequate to manufacture cathode and anode materials for lithium batteries, with a total capacity of 1,000 GWh, which could facilitate the production of around 20 million electric vehicles.
The estimated value of Ukraine’s critical materials stands at US$12 trillion, reflecting the potential for growth in the global raw materials market. When factoring in additional natural resources such as coal and natural gas, this valuation increases to US$26 trillion.
According to the Kyiv School of Economics (KSE), the rare earth deposits in Ukraine are primarily located in the central regions. However, these resources remain largely untapped, and their overall value has yet to be fully assessed.
The US$12 trillion valuation presented at the recent Davos forum should be approached with caution. A large portion of these reserves remains unexplored, and the actual quality and quantity of the resources are still uncertain.
The full scope and feasibility of Ukraine’s critical materials are not yet fully understood, necessitating further exploration to determine their genuine potential.
Minerals in Russian-Controlled Areas
Russia has taken control of approximately 70% of Ukraine’s mineral resources, with the highest concentrations found in the Donetsk, Dnipropetrovsk, and Luhansk regions. Forbes Ukraine estimates these resources to be worth around US$15 trillion.
A recent article from ‘The Moscow Times’ references an April 2023 estimate from Forbes Ukraine, which places Ukraine’s total mineral resources at 111 billion tons, valued at US$14.8 trillion, predominantly comprising coal and iron ore.
However, over 70% of these resources are situated in Donetsk and Luhansk—regions that are partially under Russian control—as well as in Dnipropetrovsk, where Russian military forces are making advances.
A 2022 report by The Washington Post suggested an even higher valuation for Ukraine’s mineral reserves, estimating them at US$26 trillion, with nearly half located in territories currently controlled by Russia.
US-China-Russia: Competition for Essential Minerals
The proposal from Trump extends beyond the situation in Ukraine; it aims to counter the influence of China and Russia.
Ukraine ranks as the fifth-largest producer of gallium, a crucial component for semiconductors and LEDs, and is a primary source of neon gas, supplying 90% of the neon required by the US chip industry. The full-scale invasion by Russia has led to a global shortage of neon, significantly impacting US chip production.
Additionally, Ukraine possesses important deposits for the nuclear sector, contributing 1% of the world’s zirconium output along with substantial reserves of beryllium and uranium. Beryllium is vital for various industries, including nuclear power, aerospace, military, acoustic, and electronics, while uranium is critical for nuclear energy and defense.
President Donald Trump’s focus on Ukraine’s essential materials is likely influenced by China’s stronghold in the rare earth market. As of January of the previous year, China was responsible for 60% of global rare earth production and processed approximately 90%, as reported by the Center for Strategic and International Studies. Through his “America First” initiative, Trump aimed to enhance US competitiveness by decreasing reliance on China.
Russia, a key provider of titanium, nickel, and platinum group metals, has been significantly affected by Western sanctions. These measures have exacerbated global shortages of essential materials such as titanium, which is critical for the aerospace and electronics sectors.
Future Implications
The global market for critical minerals, currently valued at approximately US$320 billion, is projected to double within the next five years, as reported by the World Economic Forum.
Prior to 2022, Ukraine was a significant source of steel plates, titanium, lithium, gallium, iron ore, and manganese for Europe. However, the Russian invasion has severely disrupted these supply chains, necessitating a shift to more costly and slower rail transport options.
Consequently, the struggle for Ukraine’s mineral resources extends beyond mere territorial disputes; it plays a vital role in global technology supply chains and the dynamics of geopolitical power.
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