Donald Trump’s “minerals-for-aid” offer to Ukraine last week has put the spotlight on the country’s vast and rare mineral resources, to which Washington wants rights as payback for past military support.
Ukraine has large underground deposits worth up to $11.5tn of critical minerals, including lithium, graphite, cobalt, titanium and rare earths such as gallium, that are essential for an array of industries from defence to electric vehicles.
But these deposits, uncommon in Europe, have not undergone any significant exploration or development — processes that take years even under stable jurisdictions. Data is also lacking on the quality of the reserves, which is information investors need before pouring millions into new mines.
The US president’s interest follows his vocal bid to buy Greenland, also rich in critical minerals. Western countries are racing to secure alternative sources of rare earths to China, which dominates the global supply chain.
What rare earths and critical minerals does Ukraine have?
Ukraine’s subsoil holds an estimated 10 per cent of the world’s reserves of lithium, used in battery production, according to government figures. Reserves appear across some 820 sq km, but none have been mined so far.
Among rare earths, Ukraine has substantial proven reserves of zirconium, used in jet engines, and scandium, both of which are not yet mined. Some of its deposits of tantalum, used in semiconductors, niobium, which has superconducting properties, and the aerospace sector metal beryllium are being extracted at small scale, but their potential, Ukrainian officials say, is vast.
Ukrainian officials also say their country is in the top 10 in the world for reserves of titanium, used for missiles, planes and ships. Only around 10 per cent of its proven reserves are being developed however.
Prime Minister Denys Shmyhal argued earlier this month that Ukraine could replace Europe’s Russian titanium imports. But Roman Opimakh, former director-general of the Ukrainian Geological Survey, said last week there was “no modern assessment” of rare earth reserves in Ukraine, and estimates were based on old, Soviet-era studies.
The minerals rhetoric amounted to “heavy political posturing . . . The data is not modern, we have very little information about what’s there,” said Gracelin Baskaran, a director at the US Center for Strategic and International Studies.
Where are the natural resources located?
The Ukrainian geological service says the government is preparing around 100 sites for joint licensing and development but has disclosed few details.
Ukraine’s mineral resources are located across the country but since the full-scale invasion in 2022, upwards of 20 per cent are located in areas under Russian control, according to Kyiv’s estimates.
Australian-based Critical Metals Corp bought the licences to two of the top lithium deposits in late 2021, just three months before the start of Russia’s assault. One of them, the Shevchenko deposit in the east, has fallen under Russian control, its chair Tony Sage told the Financial Times.
“That’s gone. We’ll never get that one back,” he said, adding that its Dobra deposit in the west remains the “jewel in the crown”.
Sage, whose company also has a mining licence in Greenland, said he was “very excited” about the US-Russia talks begun by Trump. “For our company it’s going to be fantastic if there’s a resolution.”
What does the US want?
Trump said last week the US was owed $500bn worth of Ukraine’s resources — from mineral deposits to oil and gas and even infrastructure such as ports — in exchange for past military assistance to defend against Russia.
That is significantly more than the total $69.2bn in military assistance Washington has given since 2014, according to State Department statistics.
Zelenskyy has rejected the proposal, insisting any deals on mineral resources must be linked to post-conflict US security guarantees, according to four people familiar with the negotiations. He is also keen for the EU and other countries such as the UK and Canada to be involved in future natural resource exploitation.
What are the complications?
Investors and experts say barriers are significant to swiftly developing these mining projects: complex state bureaucracy, government regulations, limited access to geological data and challenges in securing land.
Russia’s ongoing attacks on the energy infrastructure have forced some mining operations to turn to generators, driving up the cost of extraction and transport of the mined metals.
“While Ukraine may have mineral potential for various commodities, and an established steel and ferroalloys sector which could be resuscitated, its future is very uncertain,” said Jack Bedder, founder of market intelligence group Project Blue.
That “doesn’t bode well for investment in projects which can take decades to finance, develop, and commission,” he said.
Swiss-based Ferrexpo has a major iron ore mining and production operation in Ukraine that required “substantial investment” to sustain production “following several years of constrained activities”, analysts at Peel Hunt said on Monday.
“Once hostilities have stopped, we suspect the biggest risk will become securing skilled employees,” they added.
Australian-listed Volt Resources halted production at its Zavalievsky graphite mining operation at the end of last year because of challenging conditions.
Did Zelenskyy miscalculate in his pitch to Trump?
Zelenskyy first floated the idea of offering up mining rights to US companies as part of a “peace plan” he pitched to Trump last year.
But European and Ukrainian officials told the FT that Zelenskyy may have made a strategic error by not including an overall value or any specifics.
“It was written as a lure for Trump, clearly,” said one senior European official involved in talks with Kyiv. “But the lack of detail meant Trump could essentially name his price.”
“Some around Zelenskyy regret the way it was handled . . . they lost control of the narrative,” the official added.
A senior Ukrainian official said Zelenskyy should have been “crystal clear” about those resources being tied “to future guarantees of [American] security assistance”.
Zelenskyy’s team is scrambling to come up with an attractive counterproposal. The Trump approach has enraged his European allies, with officials at the Munich Security Conference last weekend comparing it to “mafia blackmail tactics”, “usury” and “colonialism”.
“It’s one thing to say we will help you liberate your land and then exploit the resources under the ground there,” said a second European official. “It’s another to demand: ‘Pay this bill for the help we’ve already provided’.”
Cartography by Steven Bernard