What are the critical minerals that Ukraine has that Trump is after?

BarcelonaAfter several weeks of pressure, Ukrainian President Volodymyr Zelensky confirmed on Wednesday that Ukraine and the United States have reached an agreement an agreement in principle to share part of the profits generated by the exploitation of Ukraine's natural resources. The pact establishes the creation of a joint investment fund to which Ukraine will contribute half of the profits generated by its resources, including rare earths, crucial elements for key industries such as defense and the green transition.

Zelensky said on Wednesday that the government has valued the final version of the agreement "quite well" and Donald Trump has assured that his Ukrainian counterpart will be in Washington on Friday to sign it.

According to Zelensky, the agreed draft does not refer to any debt of Ukraine in exchange for US military assistance during these three years of war, as Trump had proposed. And he reiterated that Kiev insists that the agreement commit the US to offer "security guarantees" to protect the country from a possible future aggression from Russia. "I wanted an explicit phrase on security guarantees for Ukraine, and it is important that it is there," said the Ukrainian president.

According to the text of the agreement to which the Ukrainian media has had access The Kyiv Independent, the US government "supports Ukraine's efforts to obtain the security guarantees necessary to establish a lasting peace." However, the wording is very ambiguous. And on Wednesday Trump gave an even more ambiguous answer: "We will have Europe do it [provide security guarantees] because [Ukraine] is there [...], but we will make sure that everything goes well."

50% of all natural resource revenues

The draft also notes that part of the contributions to the fund will be reinvested, at least once a year, "in promoting the security and prosperity of Ukraine." In this regard, Ukrainian Prime Minister Dennys Shmyhal has stated that his country's contribution to the investment fund will be 50% of future revenues from the "monetization of all natural resource assets" and that the US "will also make corresponding contributions." However, the US will have majority ownership of the fund.

The text therefore speaks of all of Ukraine's natural resources, including mineral deposits, hydrocarbons, oil, natural gas and other extractable materials, such as the so-called rare earths. These are seventeen metallic elements of the periodic table: fifteen elements of the lanthanide group, in addition to scandium and yttrium. They are metals that are difficult to access and difficult to separate from other elements, which is why the draft also mentions ... which requires a lot of resources and technology now mainly in the hands of China. The Asian giant controls more than 80% of the global supply of these elements, crucial for the development of green energy, electronic products and weapons. For this reason, Both Europe and the United States are trying to reduce their dependence, although it will take many years and huge investments to be able to start marketing rare earths from deposits that have not yet been exploited.

What natural resources does Ukraine have?

Ukraine is a country with great wealth of natural resources. Official data of the country indicate that it has deposits of 22 of the 34 elements that the EU considers "critical raw materials". According to the country's investment promotion website, Ukraine is among the world leaders in reserves of coal, iron ore, natural gas, manganese, salt, oil, graphite, sulfur, kaolinite, titanium, nickel, magnesium, wood and mercury.

Ukraine's territory has 5% of the world's total mineral resources. According to official Ukrainian data, there are about 20,000 deposits and about 117 types of minerals in the country's subsoil. Although it is not known for certain, since the existing maps are at least thirty years old, according to the former general director of the Geological Survey of Ukraine. Of these, about 10,000 deposits are of industrial importance and about 3,000 were operational and producing before the war began, exploited by about 2,000 companies, according to an academic article published in 2022 by the chairwoman of the Board of the Ukrainian Association of Geologists, Hanna Liventseva.

Ukraine is a major supplier – among the world’s top ten – of titanium, manganese, kaolinite, iron, graphite and uranium, among others. Before the war began, Ukraine was a key supplier of titanium to the military industry. It also has great potential to extract lithium, as it has one of Europe’s largest reserves of this key mineral, essential for battery manufacturing. Graphite is also a major source of lithium, and Ukraine’s reserves of this material account for 20% of the world’s reserves, according to the World Economic Forum.

Ukraine is also known to have significant reserves of other critical materials such as beryllium, used for aerospace, nuclear energy and the military industry; zirconium, also used for nuclear energy and medical products; and tantalum, used to make semiconductors.

Difficulty in extracting rare earths

However, many deposits remain untapped. As do rare earths. According to Ukraine’s Geological Institute, the country has rare earths such as lanthanum, which is used to make televisions and lights but is also a component of electric car batteries. It also has neodymium – used to make magnets for speakers, computer hard drives and wind turbines – and erbium, yttrium and scandium, which are used to produce nuclear energy.

Another huge potential source of rare earths in Europe is Greenland, which has the largest untapped deposits of these critical elements. It is no surprise, then, that Trump has also revived the idea of buying (or taking control by force if necessary) this Arctic island, which is part of the kingdom of Denmark. But in both cases, carrying out exploitation projects will be neither easy nor quick.

Gracelin Baskaran and Meredith Schwarz, analysts at the Center for Strategic and International Studies (CSIC), argue that the US cannot count on the benefits of rare earths, at least in the medium term, since mining requires resources that the war has depleted; for example, the capacity to generate energy. In addition, companies are reluctant to make long-term investments in a country with high risks such as one that has just emerged from a war.

Bloomberg analyst Javier Blas, one of the leading experts on raw materials, considers that Trump's fixation with the extraction of rare earths in Ukraine is "absolute nonsense" because the country lacks commercial mines of this type of element.

What deposits does Ukraine control?

However, part of Ukraine's deposits are not under Ukrainian control, but in territories occupied by Russia. Last week Zelensky said that less than 20% of the country's total resources are under use. This is the case for most of the coal deposits, which are in the east of the country. Russia has also seized at least two Ukrainian lithium deposits, one in Donetsk and one in Zaporizhia. Australian company Critical Metals Corp bought the licenses for two of the main lithium deposits at the end of 2021, one of them under Russian control, its president, Tony Sage, explained to the Financial Times.

What role can Europe play?

Trump has made this agreement one of his many battle horses at the beginning of his second term and has put unprecedented pressure on Zelensky from a supposed ally (to the point of calling him a dictator). But the idea of a shared exploitation of Ukrainian natural resources is not new and, in fact, it was already suggested by the Ukrainian president last October, when he gave The first clues of his "victory plan". Among the points he highlighted was the possibility that the European Union and the United States could benefit from strategic natural resources that exist on Ukrainian territory in exchange for investment.

Last January, Oleksiy Sobolev, Ukraine's deputy economy minister, said the government was working on agreements with Western allies, including the United States, the United Kingdom, France and Italy on projects related to the exploitation of critical materials. The government estimates that the sector has a total investment potential of between $12 and $15 billion through 2033.