Page 29 - bne_March 2025_20250304

bne March 2025 Cover Story I 29
There is currently a lot of confusion over US President Donald Trump’s proposed $500bn deal to gain
control over Ukraine’s rare earth metals wealth. The problem is that Ukraine doesn’t have any rare earth minerals; it has a lot of “strategically important metals” like lithium. That is true. But actual rare earth metals? No. Almost none.
At the danger of nitpicking, rare
earth metals (REMs) are a group of
17 elements in the periodic table, consisting of the 15 lanthanides (including neodymium, dysprosium, terbium, scandium and yttrium), which are very useful, as they enable the production of sophisticated electronics thanks to the conductivity quirks of their chemical bonds when used in combination with more traditional materials.
But things like lithium and graphite (a form of carbon) – which can be found in abundance in Ukraine – are not included in the REM categorisation. Nevertheless, Ukraine is a treasure trove of these strategically important minerals and metals that are also
very important in making modern technology; lithium is crucial to the making of powerful batteries. Ukraine is home to around 20 of the 31 minerals that Europe lists as strategically important, as it doesn’t have significant deposits of its own.
A piece by Bloomberg Opinion columnist Javier Blas, released on February 19, went into the distinction between the two and undermined Trump’s assumption that Ukraine holds trillion of dollars of valuable minerals.
“What Ukraine has is scorched earth; what it doesn’t have is rare earths. Surprisingly, many people – not least, US President Donald Trump – seem convinced the country has a rich mineral endowment. It’s a folly,” Blas wrote.
Senator Lindsey Graham’s estimate that Ukrainian has $2-$7 trillion-worth of metals and minerals seems like a vast overestimate, as collectively the
strategic metals and minerals that Ukraine actually does have are worth, at the most, $775bn in total, according to bne IntelliNews estimates – comprising mostly lithium, titanium and copper.
And that is all potential. Most of these riches are still in the ground. The current value of Ukraine’s strategic metal and mineral exports from existing production was not more than $100mn in 2024.
All the attention has been on Trump’s demand for 50% of all revenues in
his harsh February 14 minerals deal, whereas the attention should be on where the tens of billions of dollars
of investment will come from to construct the mines and processing plants needed to turn Ukraine’s mineral potential into a reality. Investors into these projects are unlikely to see a dividend payout for years after ground is broken on any of these projects.
The West’s strategic vulnerability to its lack of REM deposits is a well-known problem that has been ignored for
more than a decade. A comprehensive report titled "Rare Earth Elements: The Global Supply Chain" was published by the Congressional Research Service in December 2013 that rang the alarm bells, after it pointed out that the whole world is more or less entirely dependent on China for almost all of its supply of REMs.
The report opens with two questions: “The concentration of production of
rare earth elements (REEs) outside
the United States raises the important issue of supply vulnerability. REEs are used for new energy technologies and national security applications. Two
key questions of interest to Congress are: (1) Is the United States vulnerable
to supply disruptions of REEs? (2) Are these elements essential to U.S. national security and economic well-being?”
If the rare earth metals were not important in 2013, they are a lot more important now. And Ukraine doesn’t even appear in the report as a potential source of REMs. It also notes in a table on “mine production (tonnes)” of REMs around the world the unsettling result
“none” for the US, while China accounts for 95% of global production in the same column.
But while Ukraine’s mineral wealth has been widely misnamed, that doesn’t mean its considerable mineral resources are not important and valuable.
A similar more recent report called “China's Rare Earths Dominance and Policy Responses" was published by
the Oxford Institute for Energy Studies in June 2023 that draws the same conclusions. Again Ukraine is not mentioned.
www.bne.eu