What resources will US gain access to under Ukraine mineral deal? Expert Q&A

Ukraine and the US have signed a much-anticipated deal on natural resources. The deal would open up some of the war-torn country’s mineral and energy resources to the United States.

The Conversation spoke to Dr Gavin Harper a Critical Materials Research Fellow at the Birmingham Centre for Strategic Elements and Critical Materials about the deal and what it means for both Washington and Kyiv.

What mineral resources exist in Ukraine?

The agreement between Ukraine and the US provides a list of 57 mineral resources which it applies to. Ukraine has reserves of lithium and rare earth metals valued in the trillions of dollars. Rare earth metals are a group of 17 elements, including scandium and yttrium, that are used in technology and important industrial processes.

Ukraine is also a producer of manganese, a key material in metallurgy and some of the widely used lithium-ion batteries, as well as graphite which is also used in lithium ion batteries. Ukraine also holds major deposits of zirconium silicate, which is indispensable in the ceramics industry. Ukraine’s extraction of graphite is limited, and lithium deposits have gone untouched due to the ongoing war and the need for new mining technology and investment.

The regions of Ukraine that are currently occupied by Russia are known to possess considerable reserves of critical minerals, which are vital for modern technologies. These critical minerals include lithium, titanium, graphite, and rare earth elements.

There are, however, significant challenges. Many geologists have contended that some of the critical materials Ukraine possesses are not particularly desirable to extract from an economic point of view. Some in the mining industry believe that other aspects of the deal, such as oil and gas, and access to mining infrastructure, may in the near term be the more desirable components of the deal.

While the agreement considers the primary, mined resources from the ground, Ukraine is also a large importer of new and used electric vehicles. When the components in these vehicles reach the end of life, there is an enormous opportunity to harvest and recycle these critical materials “above the ground”. There may be ways to process these materials in tandem with the new industries that will be developed to take advantage of Ukraine’s mineral wealth.

Why is the US so interested in Ukraine’s mineral resources?

Elements and materials that are economically important, but at risk of short supply are known as critical materials. There are various reasons why these might be in short supply.

Sometimes one or a small number of countries have a monopoly on the supply of a material and can leverage that position for geopolitical influence. For some materials, it is not about the accessibility of material in the ground, but the ability to process and refine it. This is known as “mid-stream processing”.

The US realises that critical materials are key to the technologies that will power the economies of the future, and seeks to secure their supply. This allows them to capitalise on the economic opportunity.

Many of these materials are essential to building the technologies that will aid decarbonisation. Given that China currently controls around 60% of global critical materials supply chains and 85% of processing capacity, it is clear why the US sees a strategic interest in developing other supply chains.

Russia’s invasion of Ukraine has already caused significant challenges around the supply of certain materials, and the ongoing war presents significant challenges to being able to take advantage of and develop the mineral resources Ukraine possesses.

What applications are these minerals used in?

Graphite and lithium are key to electric vehicle batteries and are considered important critical materials due to their essential roles in the booming lithium-ion battery industry, powering everything from smartphones to electric vehicles and grid storage.

Beryllium, valued for its exceptional lightness, stiffness, and thermal conductivity, is crucial for demanding specialised applications in aerospace, defence and electronics. Manganese is vital in steel production, because it significantly enhances steel’s strength and resistance to wear. It’s also an increasingly important component of some batteries.

Uranium’s most well-known application is as the fuel source in nuclear reactors, and it also has niche uses in medicine and industry.

How will these resources be extracted?

The implementation of the US-Ukraine minerals deal will be challenging because of Russia’s war. A primary concern revolves around the significant geographical overlap between Ukraine’s critical mineral deposits and the active war zones in the eastern and southern regions of the country.

The significant damage to Ukrainian infrastructure presents a challenge to the development of new industries and the movement of extracted goods to onward markets.

The economic case for developing critical material deposits rests on a clear and accurate understanding of the mineral wealth that exists, and for some of the resources, it is unclear how accurate that data is.

For some of the types of deposit that are in Ukraine, extractive technologies have not been currently developed to a level where they can be commercialised. It takes a long time to develop new mines and the industries associated with them. So the timescales of developing Ukraine’s mineral wealth will be longer than those of political administrations.

Read more: US-Ukraine minerals deal looks better for Kyiv than expected – but Trump is an unpredictable partner

It has taken some time for the parties to negotiate the deal, which at times has been contentious. The deal has evolved significantly from the initial proposals, and Ukraine has now agreed to the revised terms.

One thing to note is that the US was one of the signatories, alongside the UK and Russia, of the Budapest Memorandum in 1994. The memorandum’s signatories agreed “to respect the independence and sovereignty and the existing borders of Ukraine” and to refrain from threat and use of force and economic coercion against Ukraine. Given the distressed situation Ukraine finds itself in, the at times challenging negotiations sometimes felt at odds with the wording of this document.

This article was first published on The Conversation and is republished here under its Creative Commons licence.