Trump's $15 trillion mineral deal with Ukraine hits a rocky road

Donald Trump's administration anticipates that 50% of the revenue from potential extraction of Ukrainian rare earth metals would go to the United States. This is set to be one of the conditions for peace in the conflict incited by Russia. The President of Ukraine rejected this proposal, asserting it doesn't safeguard his country's long-term interests. Nevertheless, the White House remains confident that an agreement will soon be achieved, viewing it as a "historic opportunity" for Kyiv and a means to ensure "long-term security."

However, resource extraction won't be as straightforward as Trump may believe, mainly since some deposits are located in territories occupied by Russia. This was discussed with money.pl by Prof. Adam Piestrzyński from the Faculty of Geology, Geophysics and Environmental Protection at AGH in Kraków, co-author of the book "Geology of Selected Mineral Deposits of Ukraine."

Piotr Bera, money.pl: Is Ukraine a resource Eldorado?

Prof. Adam Piestrzyński from the Faculty of Geology, Geophysics, and Environmental Protection at AGH in Kraków: Ukraine has abundant resources that are scarce in Europe. The country's geological services have verified an extensive list, though not all resources are accounted for. Some are buried deep underground, and the value of others remains unknown as they have not been thoroughly examined.

Secrets spark imagination. According to "Forbes," the total value of Ukraine's mineral resources is approximately $15 trillion. Is that realistic?

It sounds like science fiction, but perspectives may shift when considering Ukraine’s numerous titanium deposits, comprising 30% of known global reserves, or its manganese ore accumulations in the eastern part of the country. Europe lacks titanium, which is utilized in nuclear submarines. Meanwhile, graphite is crucial in metallurgy, electronics, and battery manufacturing. The picture comprises 52 iron ore deposits with over a billion tons of reserves.

Only one deposit in Poland exceeds a billion tons and remains unexploited because it's too deep. In contrast, most Ukrainian deposits are near the surface. Ukraine has everything required for photovoltaics, battery production for electric vehicles, and the world's strongest neodymium magnets. Iron ore, essential for civilization, is abundant, and Europe purchases these ores or their metallurgical products.

I am starting to partially understand Donald Trump's position on accessing these deposits.

It doesn't work as simply as Trump envisions, believing that a deposit with billions of tons translates directly to profit. Each deposit must be thoroughly assessed, a process undertaken during the Soviet era, meaning Russians likely know exactly where everything is. In my view, this is one reason for the war; Russia is unwilling to allow Europe access to Ukrainian resources, which we need.

I'd like to ask you a question: How many mineral resources are allocated annually per person in Poland?

I have no idea.

Exactly. It's not common knowledge, but I estimate it at 12-13 tons per person. Where will that come from? We are closing mines without offering replacements. While environmental protection is crucial, materials are necessary to build infrastructure, and there are environmentally safe extraction technologies. Even solar panels require tons of steel. Europe is in a predicament, consuming 35% of global mineral resources but securing only 5%. And Putin is aware of this.

In Ukraine, there are four significant lithium deposits, two of which are on the front line.

They aren't easy to extract. Lithium is vital for electric cars, but how can its value be calculated, given fluctuating market prices? The same uncertainty applies to everything, from gold to lithium.

"Financial Times" recently reported that the price of lithium has fallen by 80% over 12 months, marking its lowest level since 2020.

It's impossible to definitively state the value of a specific deposit. Years may pass from the initial exploration decision to actual extraction, and market conditions can change significantly in that time. We can always talk about estimates. I sense some politicians take certain aspects for granted. Someone might toss around figures claiming resources are worth $500 billion, and Trump repeats it. They could be worth half that, if not less. Extraction still has to happen.

Assuming there's a ceasefire, how long would it take Americans to begin resource extraction? What would the cost be?

The sums are immense. Resources can't be extracted by simply bombing and creating holes. Building one shaft costs around $1 billion. Infrastructure, technology, workers, and a processing plant are needed, each requiring significant investment. Exploratory efforts alone can take five years, with logistical preparations. In many areas, Ukraine's infrastructure has been destroyed and needs rebuilding. There are no bridges, power plants, roads, or railways. The Azovstal plant in Mariupol symbolizes this devastation. Industry was advanced there, including critical metal production.

The workforce may be lacking, as experienced miners or geologists might be at the front line.

That's another issue, although Ukraine has a strong foundation. Many worked in mining there for years, with educational institutions delivering appropriate training. Ukraine is not wary of mining, unlike the EU.

Who would invest billions of dollars with the risk of a Russian missile strike at any moment?

This represents a significant risk for companies, as the Minsk agreements hold little weight. Without security assurances, no one will channel substantial funds.

I wouldn't trust any truce promises from Putin.

That's why companies, if they proceed with investing, will consider these risks, which poses a substantial cost for politicians. Especially if the project fails due to a Russian attack, potentially leading to catastrophic financial losses. It often results in bankruptcy. When copper mining started in Lubin, there were 4,000 residents. Today, it’s a 70,000-strong city developed around KGHM. Resource extraction demands massive investment, patience, and time, all scarce resources in Ukraine.

Is there a lot of fuss over nothing? Might extraction never take place?

The world abhors a vacuum, and these deposits will eventually be utilized. Did you know Ukraine boasts 23 uranium deposits? That's the energy of the future. Two mines exist between Vinnytsia and Kryvyi Rih. Yet, one is closing, and the other is nearing depletion. They also have significant nickel and cobalt deposits, as well as an abundance of kaolin, used in the chemical industry. The Burtynsky Deposit, with its excellent crystal graphite, is documented but not currently slated for exploitation. Every battery contains graphite.

Could Beijing guarantee security so the Chinese would commence extraction, especially near the front?

The Chinese scenario is a plausible angle, given their eagerness for resources. Putin would likely refrain from opposing China.

It's not as if Ukraine's resources were suddenly discovered. Couldn't European countries access them in peacetime?

We spent 30 years traveling to Ukraine, offering lectures to various companies at our own expense. We demonstrated investment opportunities, but interest was lacking. Until now, when lives are being lost, and missiles are flying. Sadly, that's the reality. It was like that, irrespective of who was in power.

In the east, there is Bakhmut, hosting copper deposits similar to those at the Fore-Sudetic Monocline. The same applies to northwestern Volhynia, in Ratne, near the Polish border. Some of the more prominent and less recognized copper deposits are there. There was no interest until now.

Bakhmut is occupied by Russians.

But it wasn’t always this way. Putin knew what he was doing. Even when the Wagner Group existed, he promised them access to resources in the areas they seized. Resources are a political commodity and will be traded here too. The question remains, who will trade with whom?

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