- An agreement giving the U.S. rights over some of Ukraine’s minerals may be based on decades-old data, according to reporting from S&P Global. Without an accurate measure of the quantity of minerals—like cobalt, lithium, and titanium—it’s difficult to know whether it makes economic sense to mine them from the earth; what’s more, many of the reserves are either entirely untapped or in Russian-occupied territory.
The U.S. and Ukraine are close to signing a deal that could give the U.S. substantial control over the smaller country’s mineral resources—something President Donald Trump has pushed for.
Details of the deal remain scarce, and it is unclear if Ukraine will receive any security guarantees. The broad contours of the deal would see the U.S. and Ukraine develop a fund for the reconstruction of Ukraine that would be partially funded by the proceeds from its mineral reserves. Ukraine would agree to contribute half of future revenue from its mineral mining to the fund; in exchange, the U.S. would help develop the mining infrastructure needed to actually extract them from the ground.
Ukraine has substantial deposits of critical minerals such as cobalt, lithium, titanium, and rare-earth minerals. As of 2022, before the Russian invasion, Ukrainian officials estimated the country had about 5% of the earth’s “critical raw materials,” according to comments made by Ukraine’s then deputy minister of environmental protection and natural resources, Svetlana Grinchuk. The minerals are essential for the production of military hardware, batteries, and industrial machinery, among other uses.
However, analysts are warning it could be years before the U.S. reaps the benefits the deal could offer. The estimates used to gauge the exact value of Ukraine’s mineral deposits are based on outdated measurements that date back to the Soviet Union, according to reporting from S&P Global. The offer from Ukraine President Volodymyr Zelensky is “based on exploration activities that took place largely between the 1960s and 1980s, when the Soviet state was actively mapping the area,” S&P wrote, citing industry experts. A modern assessment of these reserves or their possible value doesn’t exist, the firm wrote.
“There is a lot of skepticism over the accuracy of Ukraine’s national estimates given they reportedly rely on outdated Soviet-era assessments,” Capital Economics climate and commodities economist Hamad Hussain wrote in an analyst note on Wednesday.
The U.S.-Ukraine deal is nearing the finish line after tense public negotiations between the two allies. A final copy of the accord was sent to Ukraine on Tuesday, according to the New York Times.
In addition to questions of just how abundant these minerals are in Ukraine is the no-less relevant query of how exactly they will be extracted from the earth. Ukraine currently faces two critical barriers to turning itself into a mining powerhouse. First, while the country may possess notable reserves, many of them are as yet untapped. At the same time, a significant portion of those reserves—estimated to be about 40%—lie in territory currently occupied by Russia, according to Capital Economics.
Determining the exact amount of materials found in Ukraine will be important in future decisions over whether or not to actually mine them from the earth. If the deposits are too small they wouldn’t justify the exorbitant startup costs and lead times required to build functioning mines. In that case, “mining these resources is probably not worth the required investment,” Hussain told Fortune in an email.
A long timeline
It takes on average 18 years for a mine to become fully operational, from when the minerals are discovered to the initial production, according to S&P Global. And the average cost to get it running ranges between $500 million and $1 billion. Russia’s invasion has wiped out two-thirds of Ukraine’s power-generating capacity, according to the Center for Strategic and International Studies, and any significant mining activity would require a substantial build-out of the power grid, CSIS noted.
The U.S. could help Ukraine make any future mining operations “economically viable,” given its technological capabilities and expertise, Hussain said. But he cautioned technician help from the U.S. might not be enough to make extraction worth it. “This probably wouldn’t be a game changer in most cases,” Hussain said.
The U.S. focus on minerals is part of a larger geopolitical calculus as the Trump White House ramps up economic competition with China. “The deal also suggests that securing access to critical minerals in countries geopolitically aligned with the U.S. could be a key priority under the Trump administration to counter China’s influence over global critical mineral resources,” Hussain wrote.
But whether Ukraine can meet those needs remains doubtful. Trump has said he wants $500 billion worth of rare earths from Ukraine. To reach that figure, Bloomberg Opinion columnist Javier Blas notes, Ukraine would need to produce 20% of the world’s rare earths for over 150 years.
Meanwhile, accessing any deposits found in the territory currently occupied by Russia would be contingent on a peace treaty that would bring about the end of the war. That means the fate of roughly 40% of Ukraine’s mineral deposits hinges on resolving one of the most complex geopolitical problems today.
Russia and the U.S. held talks about a possible peace agreement in Riyadh, Saudi Arabia, last week. While those talks didn’t include Ukrainian officials, Russia has signaled it would be open to letting the U.S. have access to certain mineral deposits found in the territory it’s currently occupying. However, allowing the U.S. access to those mineral resources likely wouldn’t have an impact on Ukraine and Russia’s possible peace deal. “We don’t think it materially changes Russia’s stance or what Putin will demand from Ukraine in negotiations,” Hussain said in Wednesday’s report.
