The US and Ukraine signed an economic partnership agreement that forms the US-Ukraine Reconstruction Investment Fund, which will be financed by new licenses in critical materials and oil and gas in Ukraine, with 50% of revenues from these licenses allocated to this fund.
The agreement was signed after US President Donald Trump said Feb. 3 that he wanted a deal with Ukraine that provides access to the country's rare earth elements as a condition for US support.
Historical surveys suggest that, in addition to rare earth elements, highly sought-after critical minerals such as graphite, titanium, and lithium exist within Ukraine's borders.
Rare earth elements
Rare earth elements are a group of 17 metallic elements used in the manufacture of catalysts, magnets and batteries, with applications in petroleum refining, electronics, automotive and wind energy.
These elements are considered indispensable in a wide range of modern military technologies, including lasers, radar, sonar, night vision systems, stealth technology and missile guidance and control systems.
Demand for the elements is projected to rise as the world continues to electrify and decarbonize with technologies that require highly specialized rare earth magnets.
China dominance:
- The US has relied on China to supply the vast majority of its rare earths. According to the US Department of Commerce, China controls nearly 60% of rare earth mining operations, more than 85% of processing capacity and more than 90% of permanent magnet production.
- China holds a similarly dominant position in the processing of other critical minerals such as lithium, copper, cobalt and graphite.
- Growing tensions with the US have prompted China to increase its control over its rare earth supplies in recent years. While the country already maintains tight controls over Chinese rare earth mining and processing through the publication of official output quotas. Beijing has recently implemented a series of restrictions on exports of rare earths and the associated extraction and separation technologies.
- The US and other countries have been seeking alternate sources of rare earth supplies while investing in the development of their own domestic resources. These efforts include supporting new mining projects in the US and other countries, including Australia, Canada, and Norway, and investing in new technologies aimed at recovering rare earths from discarded consumer electronics.
- Countries seeking to establish independent rare earth supply chains face challenges, such as high capital expenditure and operating costs, and the subsequent environmental impacts associated with the mining and processing of rare earths.
- The Mountain Pass Rare Earth Mine in California is currently the only active rare earth mine and oxide production facility in the US. Owned and operated by MP Materials, the mine launched commercial production in January 2022. In 2024, the mine achieved record production of over 45,000 mt of rare earth oxides and 1,300 mt of neodymium-praseodymium oxide, a rare earth alloy used in permanent magnets.
Ukraine's mineral reserves
Ukraine holds about 5% of global mineral reserves, according to World Economic Forum estimates.
According to the Ukrainian government, its mineral deposits account for 22 of the 50 minerals identified by the US as critical, including lithium, graphite, copper, cobalt, nickel, manganese and uranium.
- Rare earths: The Ukrainian Geological Survey has identified six rare earth deposits in the central and southeast regions that have yet to be developed. The most viable prospect is the Novopoltavske deposit located in the Russian-occupied Zaporizhzhia region.
- Lithium: The UGS says the country has one of Europe's largest confirmed reserves, estimated at 500,000 mt of lithium. While lithium is not currently being extracted in Ukraine, Kyiv has issued an operating license to UkrLithiumMining for the Polokhivske deposit in the Kirovohrad region. The government has also issued exploration licenses for the Dobra spodumene-petalite deposit in Kirovohrad. Two of the country's most promising properties, the Kruta Balka and Shevchenkivske deposits, are located in the Russian-occupied Zaporizhzhia and Donetsk regions. All of Ukraine's reserves are located in hard rock.
- Graphite: Ukraine has six known graphite deposits with total reserves estimated at 343 million mt at a grade of 4% to 10% natural graphite. The country's only operating graphite mine is the Zavalievsky mine owned by Volt Resources (70%) and several Ukrainian entities (30%) with reserves of 22.9 million mt at a grade of 6.8% graphite. Zavalievsky also operates a graphite processing plant producing a range of graphite grades for customers in Europe, Japan and South Korea. The Ukrainian BGV Group holds licenses for the Balakhivske and Zarichna graphite projects with estimated ore reserves of 44 million mt and 33 million mt, respectively, while Turkish ONUR Group holds a license for the Horodniavska project with reserves of 130 million mt.
- Non-ferrous metals: According to UGS data, the county has 12 deposits of non-ferrous metals containing 390,000 mt of nickel, 20,000 mt of cobalt, 101,000 mt of copper, and 700,000 mt of chromium oxide. None of these metals are currently being extracted and the government has identified the Kapitonivske license in Kirovohrad and the Prutivske license in Zhytomyr as the most commercially viable for cobalt, copper and nickel production.
Prices
- Chinese domestic lithium carbonate prices remained rangebound in the week to April 30 due to bearish sentiment and weak buying interest. Platts, part of S&P Global Commodity Insights, assessed battery-grade lithium carbonate at Yuan 66,500/mt on a DDP China basis on April 30, stable day over day but down Yuan 2,500/mt on a weekly basis.
- Chinese natural flake graphite prices increased in the week to April 30, despite thin downstream demand and abundant supply from Northeast China. However, traders were holding up offers due to consistently sluggish demand. Platts assessed natural flake graphite at $405/mt FOB China on April 30, unchanged day over day but $10/mt higher week over week. This price reflects the spot value of natural flake graphite with 94%-95% carbon content and minus 100 mesh size delivered to Qingdao port.
- Chinese nickel sulfate prices increased in the week to April 30, supported by higher offers. Platts assessed spot battery-grade nickel sulfate with a minimum of 22% nickel content and a maximum of 100 ppb magnetic material at Yuan 27,000/mt ($3,749/mt) DDP China on April 30, stable day over day but up Yuan 500/mt week over week.
