Trump's minerals gamble: Can Ukraine cash in on resources?

Donald Trump's administration expects that 50% of the revenue from the potential extraction of Ukrainian rare earth metals will go to the United States. This is one of the conditions for peace in the war sparked by Russia. The President of Ukraine currently rejects this proposal, claiming it doesn't secure his country's long-term interests. However, the White House is convinced that an agreement will soon be reached. Washington believes this is a "historic opportunity" for Kyiv and a chance to ensure "long-term security."

However, extraction won't be as easy as Trump might think, especially since some of the deposits are in territories occupied by Russia, as mentioned in a conversation by Prof. Adam Piestrzyński, 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 plenty of resources that Europe lacks. The country's geological services have documented a long list, but not all resources can be counted. Some are very deep, and the value of others is a mystery because no one has studied them.

Secrets spark imagination. According to "Forbes," the total value of Ukraine's mineral resources reaches about $15 trillion. Is that fantasy?

It sounds like science fiction. However, perceptions may change when considering that dozens of titanium deposits account for 30% of known global reserves or manganese ore accumulations in the country's east. Europe lacks titanium, which is used in nuclear submarines. Meanwhile, graphite is used in metallurgy, electrotechnology, and battery production. Add 52 iron ore deposits, each with over 1.1 billion tonnes of reserves.

In Poland, we have only one such deposit of over 1.1 billion tonnes, and it's not being exploited because it's too deep. However, in Ukraine, most deposits are near the surface. Ukraine has everything needed for photovoltaics, battery production for electric vehicles, or the world's strongest neodymium magnets. Iron ore, without which our civilization doesn't exist, is not lacking, and Europe buys these ores or metallurgical products.

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

But it doesn't work as Trump thinks. If a given deposit has billions of tonnes, that's how much you can earn. Each deposit must be properly identified, which was done in the Soviet Union. So, the Russians probably know exactly where everything is located. In my opinion, this is one of the reasons for the war. The Russians don't want to give Europe access to Ukrainian resources, which we need.

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

I have no idea.

Exactly. No one in this country has a clue, and I'm guessing it's 12-13 tonnes per person. Where do we get all this from? We are closing mines and providing nothing in return. Environmental protection is important, but you need materials to build roads and houses, and there are environmentally safe extraction technologies. Even photovoltaics requires tonnes of steel. Europe is in a blind alley—it consumes 35% of global mineral resources while securing only 5%. And Putin knows this.

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

And they are not easy to extract. Lithium is crucial for electric cars, but how do you calculate its value? Prices on markets fluctuate. And it's the same with everything—from gold to lithium.

"Financial Times" recently reported that the price of lithium has fallen by 80% over 12 months and it's at its lowest level since 2020.

You can't simply say the value of a given deposit is so much. After all, years pass from the decision to search for deposits to extraction, and the market can change dramatically during that time. We can always talk about estimates. It seems that some politicians take certain figures for granted. Someone threw around the idea of resources worth $500 billion, and Trump repeats it. Maybe those resources are worth half as much? And you still have to extract them.

Let's assume there's a ceasefire. How long would it take Americans to begin resource extraction? How much would it cost?

Those are huge sums. You can't extract resources by dropping a bomb and making a hole in the ground. Building one shaft costs an average of $1 billion. You need infrastructure, technology, people, a resource processing plant—another considerable investment. Prospecting alone can take five years with logistics preparation. And in many places, Ukraine's infrastructure is destroyed and needs to be rebuilt. There are no bridges, power plants, roads, or railways. The Azovstal plant in Mariupol is a symbol of this destruction. There, the industry was developed, including critical metals.

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

And that's another problem, although Ukraine has a very good background. For years, many people worked in mining there, and they have schools at an appropriate level. Ukraine is not afraid of mining. Unlike the EU.

Who will want to invest billions of dollars knowing that a Russian missile could strike at any moment?

This is a considerable risk for firms because the Minsk agreements mean nothing. Without security guarantees, no one will invest big money.

I wouldn't believe a single word from Putin about a truce.

That's why companies, if they choose to invest, will take this into account. It will cost politicians a lot. If the project fails, e.g., due to a Russian attack, the money invested in extraction may be irretrievably lost, which often means bankruptcy. When they started mining copper in Lubin, there were 4,000 people living there. Now, it's a city of 70,000 built around KGHM. Extraction requires enormous investments, patience, and time, which no one in Ukraine has.

So is there much ado about nothing? Might extraction not happen at all?

The world doesn't like emptiness, and these deposits will undoubtedly be exploited. Did you know Ukraine has 23 uranium deposits? That's the fuel of the future. Two mines are located between Vinnytsia and Kryvyi Rih. But one is being phased out, and the other will soon be exhausted. They also have nickel and cobalt deposits and plenty of kaolin used in the chemical industry. The Burtynsky Deposit with excellent crystal graphite is documented, but it's not yet planned for exploitation. And every battery has graphite.

Maybe Beijing will guarantee security, and the Chinese will begin extraction, especially in areas near the front?

The Chinese scenario is a good lead because they will embrace any resource with open arms. And Putin wouldn't want to oppose them.

It's not like the resources in Ukraine were suddenly discovered. Couldn't Europe access them during peacetime?

For 30 years, we traveled to Ukraine and organized lectures for various companies at our own expense. We showed there was an investment opportunity, but no one cared—until now, when people are dying and missiles are flying. Unfortunately, that's reality. It was like that, regardless of who was in power.

In the east, there is Bakhmut, where copper similar to that on the Fore-Sudetic Monocline is found. The same is true in northwestern Volhynia, in the town of Ratne near the Polish border. Some of the larger and not fully recognized copper deposits are there. No one was interested in them before.

Bakhmut is occupied by Russians.

But it wasn't like that before. Putin knew what he was doing. Even when the Wagner Group existed, he promised them access to resources in the territories they occupied. Resources are traded politically. And that will be the case here, too. The question remains: who will trade with whom?

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