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32 I Cover story bne March 2025
The White House is trying to cut a deal with President Zelenskiy to tap the"trillions of dollars" of "rare earth metals" in Ukraine. The problem is, it doesn't have any.
The primary difference between rare earth metals and elements such as lithium lies in their chemical properties and applications. Lithium is an alkali metal rather than a rare earth metal.
It is highly reactive, lightweight and primarily used in lithium-ion batteries for electric vehicles and energy storage. In contrast, rare earth metals are essential for manufacturing permanent magnets (used in wind turbines and electric motors), phosphors (for LED screens) and catalysts (in industrial and automotive applications).
Not what it seems
China and Russia already represent a strategic threat to the US’ self-proclaimed desire to stay at least one, if not two, generations ahead of the of the rest of the world in high-tech. China in particular already has the ability to smother US tech development simply by restricting exports of its REMs, says Blas. And though often presented as essential to high-tech applications and weapons production,
“their uses are far more prosaic.”
Trump as usual seems to have deluded himself, saying on February 3 that Ukraine has “very valuable rare earths.” That was followed by Senator Lindsey Graham, who has been a driving force in selling Trump the minerals deal.
“People don’t talk much about it, but you know, the richest country in all of Europe
for rare earth minerals is Ukraine. $2-$7 trillion-worth of minerals that are rare earth minerals, very relevant to the 21st century. Ukraine is ready to deal with us, not the Russians,” Graham told Fox News at the end of last year. Ukraine has no significant rare earth deposits other than small scandium mines, according to Blas.
“At best, the value of all the world’s rare-earth production rounds to $15bn a year – emphasis on “a year.” That’s equal to the value of just two days of global
oil output. Even if Ukraine had gigantic deposits, they wouldn’t be that valuable in geo-economic terms,” says Blas.
That makes Trump’s demand that Ukraine sign off on a $500bn minerals deal a fantasy. If Ukraine were miraculously to produce 20% of the world’s rare REMs, that would still only bring in some $3bn a year, so it would take 167 years for the deal to earn the mooted $500bn total.
While REMs are crucial in the production of modern highest technology gadgets, the amount of these metals actually used in such production is tiny. Although the
cost per kilo of these metals can be extraordinary high, the few grams
of REMs that are actually needed to make the widgets work is tiny, so their contribution to the cost of production
is negligible. That is why only a handful of players have been prepared to invest the tens of millions into refining production to make them; and China has invested as much for strategic reasons as commercial.
There is even a question mark over the economic viability of mining what
rare earth metals Ukraine has. One of the few confirmed REM deposits is at Novopoltavske (tantalum, niobium, strontium and magnetite), which was discovered by the Soviets in the 1970s, but even the government says it is “hard to extract” and has remained fallow since then.
Blas goes on to point out that the original confusion over the distinction between REMs and simply strategically important minerals can be traced to
a report by the Nato Energy Security Centre of Excellence, based in Lithuania, which bears the Nato logo but is actually an autonomous entity.
The document is provocative: “Ukraine emerges as a key potential supplier
of rare earth metals such as titanium, lithium, beryllium, manganese, gallium, uranium...”
“The list should ring every alarm. Anyone with a passing knowledge of chemistry knows none of those minerals are rare earths,” says Blas.
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