Ukraine's mineral wealth and Trump's $12 trillion gamble

Donald Trump's administration anticipates that 50% of the revenue from potential extraction of Ukrainian rare earth metals will benefit the United States. This is set to be a key condition for peace in the conflict initiated by Russia. The President of Ukraine currently opposes this proposal, arguing it doesn't safeguard his country's long-term interests. However, the White House is confident that an agreement will soon be achieved. Washington perceives this as a "historic opportunity" for Kyiv and a chance to ensure "long-term security."

Nevertheless, extraction may not be as straightforward as Trump anticipates. Some of the deposits are located in territories occupied by Russia, as noted in a discussion with Money.pl by Prof. Adam Piestrzyński, a co-author of the book Geology of Selected Mineral Deposits of Ukraine, from the Faculty of Geology, Geophysics and Environmental Protection at AGH in Kraków.

Piotr Bera, money.pl: Is Ukraine a resource Eldorado?

Prof. Adam Piestrzyński from the Faculty of Geology, Geophysics, and Environmental Protection at AGH in Kraków: Ukraine has numerous resources that Europe lacks. The country's geological services have compiled a comprehensive list, which is well documented. However, not all resources can be fully accounted for. Some are very deep, and the value of others remains uncertain because no one has studied them.

Secrets spark imagination. According to "Forbes," the total value of Ukraine's mineral resources is estimated at approximately £12 trillion. Is that realistic?

It sounds like something from science fiction. However, perspectives may change when considering dozens of titanium deposits that comprise 30% of the known global reserves or manganese ore accumulations in the country's east. Europe lacks titanium, which is used in nuclear submarines. Meanwhile, graphite is employed in metallurgy, electrotechnology, and battery production. Add to this the 52 iron ore deposits, each with reserves exceeding 1 billion tonnes.

In Poland, we have only one such deposit of over 1 billion tonnes, and it's not being exploited because it's too deep. However, in Ukraine, most deposits are near the surface. Ukraine has all the necessary components for photovoltaics, battery production for electric vehicles, and the world's strongest neodymium magnets. Iron ore, an essential element of our civilisation, is abundant, and Europe purchases these ores or metallurgical products.

I am beginning to partially understand Donald Trump, who demands access to the deposits.

But it doesn't function as Trump imagines—that a given deposit contains billions of tonnes, so that's the potential earnings. Each deposit must be thoroughly identified, work undertaken in the Soviet Union, so the Russians likely know precisely where everything is located. In my view, this is one reason for the conflict. The Russians aim to prevent Europe from accessing Ukrainian resources, which we need.

I'll pose you a question. How many mineral resources used annually are allocated per capita in Poland?

I have no idea.

Precisely. No one in this nation knows, but I'm guessing it's 12–13 tonnes per person. Where will we source all this from? We are closing mines without offering replacements. Environmental protection is crucial, but materials are needed to construct roads and houses, and environmentally safe extraction technologies are available. Even photovoltaics requires substantial amounts of steel. Europe is at an impasse—it consumes 35% of global mineral resources while producing only 5% itself. Putin acknowledges this.

In Ukraine, there are four large lithium deposits, two of which are on the front line.

They're not easy to extract either. Lithium is essential for electric vehicles, but how does one assess its value? Market prices fluctuate, and the same applies to everything—from gold to lithium.

The Financial Times recently reported that the price of lithium has fallen by 80% over the past 12 months, currently at its lowest level since 2020.

One cannot simply assert the value of a given deposit as a fixed amount. After all, years may elapse between deciding to explore deposits and commencing extraction, and during that time, the market can alter drastically. We can always discuss estimates. I sense that some politicians take certain things for granted. Someone floated the figure of resources valued at $500 billion, and Trump repeated it. Perhaps those resources are worth half that? And they still need to be extracted.

Assuming there's a ceasefire, how long would it take for Americans to initiate resource extraction? What would it cost?

The figures are astronomical. Resources cannot be extracted by merely making a hole in the ground. Constructing a single shaft averages around £0.8 billion. Infrastructure, technology, personnel, and a processing plant are all required—another massive investment. Prospecting alone can span five years with logistical preparations. In many places, Ukraine's infrastructure needs reconstruction. Bridges, power plants, roads, and railways are absent. The Azovstal plant in Mariupol symbolises this destruction. There, industry developed, including critical metals.

There might also be a shortage of people. Some experienced miners or geologists may have gone to the front line.

That's indeed another challenge, although Ukraine has a well-established foundation. For years, many have worked in mining, and the country has schools of an appropriate standard. Unlike the EU, Ukraine is not averse to mining.

Who would be willing to invest billions of pounds knowing that a Russian missile could strike at any moment?

It's a substantial risk for firms because the Minsk agreements are meaningless. Without security guarantees, no one will invest significant funds.

I wouldn't trust a word from Putin about a truce.

Hence, companies will consider this factor if they choose to invest. It will incur substantial costs for politicians. If the project fails, for instance, due to a Russian attack, the money invested in extraction might be irretrievably lost. This frequently results in bankruptcy. When copper mining commenced in Lubin, the population was 4,000. Now, it's a city of 70,000 centred around KGHM. Extraction demands enormous investments, patience, and time, which Ukraine currently lacks.

So is it much ado about nothing? Could extraction not occur at all?

The world doesn't tolerate voids, and these deposits will undoubtedly be tapped into. Did you know Ukraine has 23 uranium deposits? That's the fuel of the future. Two mines are located between Vinnytsia and Kryvyi Rih. However, one is winding down, and the other will soon be depleted. They also possess nickel, cobalt deposits, and abundant kaolin used in the chemical industry. The Burtynsky Deposit, with its excellent crystal graphite, is documented, but no current plans exist for its extraction. And every battery contains graphite.

Perhaps Beijing will guarantee security, and the Chinese will begin extraction, particularly in areas near the front?

The Chinese scenario is plausible because they eagerly pursue resources. And Putin wouldn't wish to oppose them.

The resources in Ukraine weren't recently discovered. Why couldn't Europe access them during peacetime?

For 30 years, we've travelled to Ukraine, organising lectures for various companies at our own expense. We highlighted investment opportunities, but no one noticed until now, amidst the conflict where lives are being lost and missiles launched. Unfortunately, this is the reality that prevailed regardless of leadership.

In the east, there's Bakhmut, where copper deposits similar to those on the Fore-Sudetic Monocline exist. The same situation applies in northwestern Volhynia, in the town of Ratne near the Polish border. There lie some of the larger, yet not fully explored, copper deposits, which are recently drawing attention.

Bakhmut is occupied by Russians.

But it wasn’t always so. Putin knew his objectives. Even when the Wagner Group was active, he promised them access to resources in the territories they held. Resources are traded politically, and this will persist. The question remains: who will deal with whom?

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