Rare earths are needed for a multitude of applications and Ukraine is rich in these elements. Access to them will give US a shot in the arm in its competition with China.
US President Donald Trump had been pressing his Ukrainian counterpart, Volodymyr Zelensky, to accept a US$ 500 billion deal for the joint exploitation of Ukraine’s rare earths, oil and natural gas resources as a condition for American economic and security cooperation.
Speaking to Fox News about a possible mineral deal with Ukraine, Trump had said, “I told them that I want the equivalent of like US$ 500 billion worth of rare earth and they’ve essentially agreed to do that.”
Zelensky was open to the idea. And a tentative agreement was thrashed out. But it crashed moments before it was due to be signed last week because of the public berating that Zelensky suffered at the hands of Trump and his deputy J.D. Vance in the White House.
The American duo sternly demanded that Zelensky end the war immediately on terms dictated by them. But Zelensky stoutly resisted the verbal onslaught saying that there could be no peace with Putin’s Russia without a proper security cover for Ukraine which has been waging a life and death struggle for the past three years.
With Zelensky exiting in a huff, Trump’s efforts to get at Ukraine’s rich resources virtually ended, unless Zelensky changes his mind in the coming days.
Contours of tentative agreement
According to the BBC, the contours of the tentative agreement were as follows – It envisaged an “investment fund” that will be set up for war-devastated Ukraine’s reconstruction. Ukraine and the US would manage the fund on “equal terms”.
Ukraine would contribute 50 percent of future proceeds from State-owned mineral resources, oil and gas, to the fund, and the fund will then invest “to promote the safety, security and prosperity of Ukraine”.
And the US Government will, subject to US law, “maintain a long-term financial commitment to the development of a stable and economically prosperous Ukraine”. The agreement also states that the US will own the maximum amount of the fund allowed under US law.
Rare earths are strategic elements essential for developing computers, batteries, and cutting-edge energy technologies. Literature on the subject says that they are abundant in the Earth’s crust across the globe. In 2024, the US Geological Survey estimated that there were 110 million tonnes of rare earth deposits worldwide, including 44 million in China – by far the world’s largest producer. A further 22 million tonnes are estimated to be in Brazil, 21 million in Vietnam, Russia has 10 million and India seven million tonnes.
Each of the 17 rare earths is used in industry and in a wide variety of devices, from light bulbs to guided missiles. Europium is used in fluorescent-light and radar systems; cerium is used for polishing glass and in automobile catalytic converters; lanthanum salts are used in refining oil while alloys with lanthanum are used in the power systems of hybrid and hydrogen-gas cars. Neodymium and dysprosium, for example, allow the fabrication of almost permanent, super-strong magnets that require little maintenance, making viable the placement of ocean wind turbines to generate electricity far from the coastline.
All have unique properties that are almost irreplaceable or can be substituted only at prohibitive cost. The Guardian says that mining the metals requires heavy chemical use that results in huge amounts of toxic waste which has caused several environmental disasters, making many countries wary of shouldering the considerable costs for production.
And these rare earths are often found in minute ore concentrations, which means that large amounts of rock must be processed to produce the refined product, often in powder form.
China’s hold on rare earths
“For decades, China has made the most of its rare earth reserves by investing massively in refining operations. China has also filed a huge number of patents on rare earth production. This is an obstacle to companies in other countries hoping to launch large-scale processing,” says The Guardian.
“While rare earths reserves are plentiful elsewhere, many firms find it cheaper to ship their unprocessed ore to China for refining, further reinforcing the world’s reliance on China. The US and EU get most of their supply from China, but both are trying to boost their own production to reduce dependence on China,” the paper adds.
Ukraine’s mineral wealth
It is believed that about five percent of the world’s “critical raw materials” are in Ukraine. This includes some 19 million tonnes of proven reserves of graphite, which the Ukrainian Geological Survey says makes the nation “one of the top five leading countries” for graphite.
Graphite is used to make batteries for electric vehicles. Ukraine also has significant deposits of titanium and lithium. It says it has substantial amounts of the world’s rare earth metals – a group of 17 elements that are used to produce weapons, wind turbines, electronics and other products vital in the modern world. However, according to the American broadcaster NBC, industry experts say the precise value and volume of Ukraine’s mineral wealth remains unclear.
A 2023 study by Forbes found that Ukraine’s rare earth and other critical minerals could be worth as much as US$ 14.8 trillion. But industry experts told NBC that Trump’s reference to US$ 500 billion worth of rare earths in Ukraine seriously overstates the potential total value of the country’s rare earth reserves. The entire global rare earths market is worth only about US$ 12 billion, according to some estimates.
However, Ukraine has an abundance of scandium, a rare earth element, according to experts. But detailed information on these reserves is classified, NBC says. Scandium is used in everything from military equipment to sporting goods.
Ukraine also has other rare earths including cerium, dysprosium, erbium, gadolinium, holmium, lanthanum, lutetium, neodymium, praseodymium, samarium, terbium, thulium and yttrium. Ukraine also has other critical minerals that are not classified as rare earths but are valuable and required for weapons systems, aircraft and other sophisticated technology. The U.S. Geological Survey lists 50 minerals considered critical to national security and for America’s economy.
