A new front has opened in the Ukraine conflict over who will control the country’s supposedly vast mineral wealth after the shooting is over. Last week Donald Trump crassly announced that he wanted “the equivalent like $500 billion worth of rare earth,” and claimed that the Ukrainians have “essentially agreed to do that so at least we don’t feel stupid.” Over the weekend, Volodymyr Zelensky begged to differ, telling journalists in Kyiv that he was “not signing something that ten generations of Ukrainians are going to pay later.”
One small problem. All this talk of Ukraine’s billions or even trillions in mineral wealth is actually pie in the sky. For all practical purposes, it doesn’t exist. “What Ukraine has is scorched earth; what it doesn’t have is rare earths,” says Bloomberg Opinion columnist Javier Blas. “Surprisingly, many people – not least, US President Donald Trump – seem convinced the country has a rich mineral endowment. It’s a folly.”
According to the US Geological Survey, “Ukraine isn’t known to hold any reserves of the main rare earths elements” - a list of 17 metals used in tiny quantities in semiconductors, high speed electrical engines and the like. But Ukraine has none.
But let’s assume that Trump misspoke. What he actually meant was non-rare ‘critical’ minerals like lithium, uranium, gallium and titanium. And indeed, Ukraine has Europe’s largest deposits of lithium, a soft metal crucial to the battery industry and EV business, 2 per cent of the world’s total identified uranium ore, 7 per cent of the world’s total titanium, plus cobalt, graphite, copper and nickel. Republican Senator Lindsey Graham last year excitedly spoke of Ukraine as “the richest country in all of Europe … $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’s vision of Ukraine made it seem a veritable Klondike of profit and world-historical strategic importance. No wonder the Trump team sat up with dollar signs in their eyes.
Unfortunately, this gorgeous vision of Golconda on the Dnipro is based on a basic accounting error. The dumb way of calculating the value of mineral reserves is to multiply the estimated tonnage that potentially exists underground by the current world price. But that’s not a real-world number. The true picture of value emerges only when you take into account how much of the stuff you can actually sell per year in the global market – minus the vast costs of actually extracting and refining it.
Take, for instance, titanium. In 2023 the entire world market for the hard, super-light metal was $31 billion. Last year, Ukraine exported just $11.6 million – not billion – of titanium-bearing minerals. Though in theory some 7 per cent of the world’s reserves of titanium are under Kyiv’s control, it will take an investment of billions to create refining capacity to make more valuable and exportable titanium sponge. Even then, seven percent of the world market would amount to gross sales of just over $2 billion a year.
It’s the same story with lithium. In Lindsey Graham’s imaginary world, Ukraine’s estimated 500,000 tonnes of reserves could be worth between $10bn and $12.5bn at current prices. But world lithium sales in 2024 were just $37 billion – down 22 per cent over the previous on the back of oversupply and weak demand. But so far, according to a recent report by BNE Intellinews, “Kyiv has yet to even begin exploiting its deposits [and] produces no lithium.” Plus some of the most promising deposits at Kruta Balka deposits in the Zaporizhzhia region are partially under Russian control.
Ukraine’s exports of uranium ore have jumped by 250 per cent since the beginning of the war – but those exports were still only worth $29 million in total in 2023. Russia dominates the global market in refining ‘yellow cake’ uranium ore of the kind used in nuclear reactors around the world – including the US, which continues to be dependent on Russian supplies. The likelihood of Ukraine exporting its ore to Russia for refinement are slim. Ukraine’s graphite exports last year were just $7 million. The list goes on.
What Ukraine is truly rich in is natural gas and coal – as discovered by the Welshman John Hughes in the 19th Century in the valley of the Donets river. Donetsk used to be called Hughesovka after him, in fact. Trouble is that all these huge untapped gas reserves lie smack under the current front lines, and many coal mines are firmly under Russian control and have been since 2014. The chances of these reserves being tapped are close to zero. Western oil and gas companies like to invest in stable countries – and hydrocarbon fields that stretch over international borders are a recipe for conflict.
It was the Ukrainian government who began the myth of Ukraine’s vast mineral wealth. Keen to find a way to engage the newly-elected Trump administration, they produced a report called “Ukraine: Critical Minerals Portfolio” last November. Their extravagant claims were picked up by the Nato Energy Security Centre of Excellence, a Lithuanian-based NGO, which in a December 2024 report breathlessly claimed that “the strategic importance of Ukraine’s critical materials cannot be overstated … These resources are crucial for industries such as defence, high-tech, aerospace, and green energy.” Ukraine’s ability to provide these minerals is “vital for nations aiming to lessen reliance on non-democratic countries like China, Russia, Iran, and other non-democratic regimes.” So the Graham-Trump narrative of Ukraine’s great riches and vast geo-strategic importance was born.
The US has made the same mistake before. Back in 2010 the Pentagon, drawing on a rediscovered Soviet-era geological survey, excitedly declared Afghanistan the “Saudi Arabia of lithium” because it supposedly had $1 trillion of untapped mineral deposits. But the world was already oversupplied and no bonanza ever materialised.
The Trump administration has allowed itself to be portrayed as a bunch of rapacious colonists, seizing a country’s untapped wealth in exchange for military aid that was and should be offered as assistance not barter. But the numbers don’t stack up. We are seeing is the ugly spectacle of ill-informed fools arguing over a bubble of nothing.
A new front has opened in the Ukraine conflict over who will control the country’s supposedly vast mineral wealth after the shooting is over. Last week Donald Trump crassly announced that he wanted “the equivalent like $500 billion worth of rare earth,” and claimed that the Ukrainians have “essentially agreed to do that so at least we don’t feel stupid.” Over the weekend, Volodymyr Zelensky begged to differ, telling journalists in Kyiv that he was “not signing something that ten generations of Ukrainians are going to pay later.”
One small problem. All this talk of Ukraine’s billions or even trillions in mineral wealth is actually pie in the sky. For all practical purposes, it doesn’t exist. “What Ukraine has is scorched earth; what it doesn’t have is rare earths,” says Bloomberg Opinion columnist Javier Blas. “Surprisingly, many people – not least, US President Donald Trump – seem convinced the country has a rich mineral endowment. It’s a folly.”
According to the US Geological Survey, “Ukraine isn’t known to hold any reserves of the main rare earths elements” - a list of 17 metals used in tiny quantities in semiconductors, high speed electrical engines and the like. But Ukraine has none.
But let’s assume that Trump misspoke. What he actually meant was non-rare ‘critical’ minerals like lithium, uranium, gallium and titanium. And indeed, Ukraine has Europe’s largest deposits of lithium, a soft metal crucial to the battery industry and EV business, 2 per cent of the world’s total identified uranium ore, 7 per cent of the world’s total titanium, plus cobalt, graphite, copper and nickel. Republican Senator Lindsey Graham last year excitedly spoke of Ukraine as “the richest country in all of Europe … $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’s vision of Ukraine made it seem a veritable Klondike of profit and world-historical strategic importance. No wonder the Trump team sat up with dollar signs in their eyes.
Unfortunately, this gorgeous vision of Golconda on the Dnipro is based on a basic accounting error. The dumb way of calculating the value of mineral reserves is to multiply the estimated tonnage that potentially exists underground by the current world price. But that’s not a real-world number. The true picture of value emerges only when you take into account how much of the stuff you can actually sell per year in the global market – minus the vast costs of actually extracting and refining it.
Take, for instance, titanium. In 2023 the entire world market for the hard, super-light metal was $31 billion. Last year, Ukraine exported just $11.6 million – not billion – of titanium-bearing minerals. Though in theory some 7 per cent of the world’s reserves of titanium are under Kyiv’s control, it will take an investment of billions to create refining capacity to make more valuable and exportable titanium sponge. Even then, seven percent of the world market would amount to gross sales of just over $2 billion a year.
It’s the same story with lithium. In Lindsey Graham’s imaginary world, Ukraine’s estimated 500,000 tonnes of reserves could be worth between $10bn and $12.5bn at current prices. But world lithium sales in 2024 were just $37 billion – down 22 per cent over the previous on the back of oversupply and weak demand. But so far, according to a recent report by BNE Intellinews, “Kyiv has yet to even begin exploiting its deposits [and] produces no lithium.” Plus some of the most promising deposits at Kruta Balka deposits in the Zaporizhzhia region are partially under Russian control.
Ukraine’s exports of uranium ore have jumped by 250 per cent since the beginning of the war – but those exports were still only worth $29 million in total in 2023. Russia dominates the global market in refining ‘yellow cake’ uranium ore of the kind used in nuclear reactors around the world – including the US, which continues to be dependent on Russian supplies. The likelihood of Ukraine exporting its ore to Russia for refinement are slim. Ukraine’s graphite exports last year were just $7 million. The list goes on.
What Ukraine is truly rich in is natural gas and coal – as discovered by the Welshman John Hughes in the 19th Century in the valley of the Donets river. Donetsk used to be called Hughesovka after him, in fact. Trouble is that all these huge untapped gas reserves lie smack under the current front lines, and many coal mines are firmly under Russian control and have been since 2014. The chances of these reserves being tapped are close to zero. Western oil and gas companies like to invest in stable countries – and hydrocarbon fields that stretch over international borders are a recipe for conflict.
It was the Ukrainian government who began the myth of Ukraine’s vast mineral wealth. Keen to find a way to engage the newly-elected Trump administration, they produced a report called “Ukraine: Critical Minerals Portfolio” last November. Their extravagant claims were picked up by the Nato Energy Security Centre of Excellence, a Lithuanian-based NGO, which in a December 2024 report breathlessly claimed that “the strategic importance of Ukraine’s critical materials cannot be overstated … These resources are crucial for industries such as defence, high-tech, aerospace, and green energy.” Ukraine’s ability to provide these minerals is “vital for nations aiming to lessen reliance on non-democratic countries like China, Russia, Iran, and other non-democratic regimes.” So the Graham-Trump narrative of Ukraine’s great riches and vast geo-strategic importance was born.
The US has made the same mistake before. Back in 2010 the Pentagon, drawing on a rediscovered Soviet-era geological survey, excitedly declared Afghanistan the “Saudi Arabia of lithium” because it supposedly had $1 trillion of untapped mineral deposits. But the world was already oversupplied and no bonanza ever materialised.
The Trump administration has allowed itself to be portrayed as a bunch of rapacious colonists, seizing a country’s untapped wealth in exchange for military aid that was and should be offered as assistance not barter. But the numbers don’t stack up. We are seeing is the ugly spectacle of ill-informed fools arguing over a bubble of nothing.