After Zelensky offered Trump a share of Ukraine’s precious minerals in exchange for American assistance, the American president rushed to send Kiev a proposal that seems extremely unfavorable. It could be a major transactional move by Trump or a well-devised plan by Ukrainians to draw Americans into the path of the Russians.
It is not clear at all whether this whole story about rare earths/critical minerals is somehow a brilliant move by the Ukrainians, aiming to sell Americans something that may not be as valuable as it seems at first glance, or if we are dealing with a new episode of wealth acquisition, in a colonialist style, by the United States, as shown in an analysis published by Sky News.
One thing is certain: in eastern Ukraine, deep underground, there is a veritable flow of minerals: rich coal reserves, dense concentrations of iron ore, and, further west, in Nikopol, some of the largest manganese reserves in the world - as well as other more exotic minerals.
It All Started with Zelensky, and Trump Couldn't Resist
The geological wealth of Donbas and neighboring regions has long been viewed with envy by friends, enemies, and neighbors of the country. In the 19th century, Tsar Alexander II identified the Donetsk River basin as the ideal place for iron and steel factories - largely due to the dense deposits of coal and iron.
In World War II, Adolf Hitler coveted Ukraine's natural resources and ultimately invaded the region for them - although Ukrainians spent most of the occupation refusing to extract them.
Now, Donald Trump is the latest world leader to set his sights on Ukrainian minerals, viewing them as a form of compensation for the billions of dollars America has spent to support Kiev following the Russian invasion.
In a draft agreement proposed by Americans, obtained by the British daily The Telegraph, America claims 50% of Ukraine's future mining revenue.
The idea emerged after a meeting at Trump Tower last September between Donald Trump and Volodymyr Zelensky, in which the Ukrainian president proposed to grant the United States a share of the country's rare earths and precious minerals in exchange for ongoing arms deliveries.
The issue is that Zelensky was met with a burdensome proposal from the Americans, even tougher economically than the Treaty of Versailles, which imposed crippling reparations on Germany after World War I, and than the compensations imposed on Germany and Japan after the second world conflict.
Trump mentioned the sum of 500 billion dollars that Ukraine would be willing to transfer to the United States by ceding the exploitation of its resources. However, a closer look at the country's geology and the nature of the mining industry raises some serious doubts that it could be so, notes Sky News.
And this is not the only bizarre feature of this story.
A Story Full of Oddities
On one hand, everyone knows that Trump is a negotiator - eager to extract as much as possible from each negotiation - and therefore, it is quite plausible that he would be attracted to a deal promising a monetary reward for America. But, at the same time, the main direction of American economic policy since he came to the White House has been to impose economic barriers on other countries. Becoming even more dependent on a foreign power for mineral resources seems to contradict this conception.
The other significant factor is that many of these deposits - both conventional minerals like coal and more exotic minerals like titanium, lithium, and rare metals - are located in or around areas currently under Russian occupation.
This raises another question: could this be a trick by Ukraine to attract American companies and capital to an area under the threat of Russian destruction, a scheme through which Ukraine would feel more protected?
But the strangest - perhaps the most important - part of all is that, apart from long-known coal and iron deposits, it is not clear at all whether any of Ukraine's critical mineral deposits have a value that would change the world.
Ukraine certainly has significant proven lithium resources - around 500,000 tons, more than any other country in Europe. But it's a small "slice" compared to the 1.8 million tons of lithium reserves in the US. Indeed, looking at other potential lithium resources under America, estimated at 19 million tons, it's more than the country will ever need for its electric vehicle fleet.
As for graphite, Ukraine has a decent amount, but there is much more in Norway, Korea, and Brazil.
Ukraine has quite a lot of titanium ores, but again, less than what is found in much more stable regions of the world, such as Australia and Canada. And anyway, in the case of titanium, the main challenge is not so much finding deposits in the ground, but expertise in refining it into a metal, as shown in the mentioned analysis.
The same discussion applies to rare earth elements - a very specific corner of the periodic table where we find neodymium, lanthanum, and other unknown substances.
These elements are crucial for the production of high-power magnets and special steel alloys used by the military. However, it is not at all clear whether Ukraine is particularly rich in these elements. Of the 109 critical mineral deposits identified by the Kiev School of Economics throughout the country, only three are actually specialized in rare earth elements.
Anyway, the main reason China dominates global rare earth production has less to do with the prevalence of ores in the ground there, but rather with the fact that it is more willing to undertake the dirty and energy-consuming refining process than most countries.
"Wealth" of Afghanistan and Ukraine's Resources
None of the above disputes the fact that there are plenty of minerals in Ukraine. There are certainly large coal and iron deposits, plenty of manganese, a lot of titanium, and also a lot of gas stored in shale formations. Most of the more abundant deposits have been exploited for some time and could represent an important part of Ukraine's future economy.
But there are three important aspects to consider:
- in most cases, these are not in immense quantities.
- in most cases, the US actually has equivalent or superior deposits available on its territories or nearby neighbors
- the real challenge of minerals is not identifying them in the ground, but extracting them from the ground cheaply and safely. When it comes to critical minerals, Ukraine is still far from this point.
In short: it is not at all clear whether this whole story about rare earths/critical minerals is somehow a brilliant move by the Ukrainians, aiming to sell Americans something that may not be as valuable as it seems at first glance or if we are dealing with a new episode of colonial-style wealth acquisition by the United States. Which is certainly bizarre.
Again, there is a long series of strange stories, such as these, that arise in times like these. In the final days of the occupation of Afghanistan, occasional stories emerged about the "vast mineral wealth" that would soon turn it into a true Saudi Arabia of the 21st century. What ultimately came out of it? Not much.
And this is largely the case with Ukraine as well. Occasionally, a mineral discovery can truly change the world - enough to trigger wars and make one nation dominate another. But most of the time, when it comes to metals and minerals, invented stories tend to outnumber the real ones, concludes the mentioned analysis.
T.D.