The mineral deal struck this week between the U.S. and Ukraine—hyped by President Donald Trump as a “very big deal” and prompting an expected U.S. visit by President Volodymyr Zelensky on Friday—will not likely generate significant revenue, at least in the near future, according to experts who spoke to Forbes and raised concern over the onerous costs and lengthy production timelines required to mine the raw materials sought by the White House.
Earth and minerals are loaded onto trucks at an open-pit mine in Ukraine's Donetsk region.
Zelensky confirmed Wednesday an agreement between the U.S. and Ukraine that would send 50% of the proceeds from Ukraine’s state-owned mineral resources to a jointly owned fund.
The specifics of the deal remain unclear, though it’s understood it would not draw from currently operational mines, and that proceeds would in part go toward repaying the U.S. for its aid to Ukraine in its war with Russia and also go toward rebuilding the war torn country, according to a draft contract reviewed by multiple news organizations.
Trump characterized the agreement as a “very big deal,” and Ukraine does have a store of natural resources, including deposits of lithium (notably used for batteries including for electric vehicles), graphite (batteries and aerospace engines) and ilmenite, an element used for titanium (aircraft engines and iPhones).
But experts tell Forbes the cost involved in mining the most desirable minerals could prove costly, take years of investment and ultimately not offer a huge payoff.
Trump touted Ukraine’s “great rare earth” metals—the 17 metallic elements similarly necessary for battery and high-tech defense equipment— and the country does have an estimated 5% of the world’s rare earth minerals.
But Ukraine has no active rare earth mines, according to S&P Global, and expanding the scope of Ukraine’s untapped resources beyond rare earth minerals, developing Ukraine’s graphite, lithium and titanium deposits, which were in various stages of development prior to Russia’s 2022 invasion, is a massive lift requiring “substantial investment,” according to Willis Thomas, head of the CRU+ team at the mining and metals research firm CRU Group.
Likely not any time soon. These minerals “won’t be used to make a profit in the next 10 or 15 years,” Benchmark Minerals Intelligence rare earths pricing analyst George Ingall told Forbes. Ingall noted it’s likely lithium is the priority for any development efforts, but “a realistic expectation” of any Ukrainian lithium supply coming to market is at minimum three or four years away, TD Cowen analyst David Deckelbaum told Forbes. Ukraine will also retain all revenues from existing mines, according to The New York Times, which may preclude the U.S. from accessing the handful of underway mineral projects in Ukraine, including a 90-year-old graphite mine and two early-stage lithium mines, according to Ingall.
Up to $2 billion. That’s how much capital it takes to get a rare earth mineral mine operational, Ingall said, noting miners globally are “really struggling to get any investment” due to “poor” market conditions. “It doesn't matter if you've got all these rare earth ores in the ground, if it's not a profitable thing to mine, then no one's going to want to do it,” Ingall explained.
No time soon. Thomas said graphite and rare earths are “relatively abundant” around the world. The “majority” of their value is not from the deposits themselves but from the refining process, in which the metals are converted into their chemical forms needed for batteries, which “barely exists outside of China” today. China controls 65% to 70% of lithium refining capacity, according to Deckelbaum, who added the country “completely dominates” the graphite market as well. But “you don't necessarily come up with an ex-Chinese solution by capturing” more raw materials, as there are “plenty” of resources from Australia to South America. Competition with Chinese efforts have largely struggled to be economically viable, as China’s high supply drives prices lower. China is “flooding the market with cheap material, which just makes it so hard to operate as a non-Chinese player,” explained Ingall. Present market conditions suggest tapping into Ukrainian minerals may not move the needle in the near future, but “access to the resources is a necessary” step in “creating a larger volume of supply that's not mined or processed in China,” Thomas noted.
As the second-largest global producer of electric vehicles, it comes as no surprise that the Elon Musk-led company is “one of the largest procurers of lithium in the world,” according to Deckelbaum. But Tesla’s lithium sourcing tracks the broader supply chain and the company led by Elon Musk is buying the metal “from everywhere,” noted Deckelbaum. Ukrainian officials approached Musk about investing in building out their country’s lithium prior to Russia’s invasion, according to The New York Times. Tesla and Musk have not been linked to the 2025 deal despite Musk’s highly powerful role beside Trump in the White House.