Why is Ukraine negotiating a minerals deal with the US?

Ukraine has agreed to the outline of a major deal that would give the US access to Ukraine’s mineral deposits, a senior official in Kyiv has told the BBC.

Kyiv has faced growing pressure from Washington to sign the deal, which has been at the centre of a rift between the US and Ukrainian presidents.

Kyiv estimates that about 5% of the world’s “critical raw materials” are in Ukraine.

This includes some 19m tonnes of proven reserves of graphite, which the Ukrainian Geological Survey state agency says makes the nation “one of the top five leading countries” for the supply of the mineral. Graphite is used to make batteries for electric vehicles.

Ukraine has 7% of Europe’s supplies of titanium, a lightweight metal used in the construction of everything from aeroplanes to power stations.

It is also home to a third of all European lithium deposits, the key component in current batteries.

Other elements found in Ukraine include beryllium and uranium, which are both crucial for nuclear weapons and reactors.

Deposits of copper, lead, zinc, silver, nickel, cobalt and manganese are also significant.

Further, Ukraine has significant deposits of rare earth metals. These are a group of 17 elements that are used to produce weapons, wind turbines, electronics and other products vital in the modern world.

Some of the mineral deposits, however, have been seized by Russia. According to Yulia Svyrydenko, Ukraine’s economy minister, resources worth $350bn (£277bn) remain in occupied territories today.

In 2022, SecDev, a geopolitical risk consultancy based in Canada, conducted an evaluation, which established that Russia had occupied 63% of Ukrainian coal mines, as well as half of its manganese, caesium, tantalum and rare earth deposits.

Dr Robert Muggah, principal of SecDev, says that such minerals add a “strategic and economic dimension” in Russia’s continued aggression. By seizing them, he says, Moscow denies access to revenue for Ukraine, expands its own resource base and influences global supply chains.

Critical minerals “are the foundation of the 21st Century economy”, Dr Muggah explained. They are key to renewable energy, military applications and industrial infrastructure and play “a growing strategic role in geopolitics and geoeconomics”, he said.

Additionally, the US is keen on a deal for Ukraine’s mineral resources because it wants to reduce dependency on China, which controls 75% of rare earth deposits in the world, according to the Geological Investment Group.

In December, China banned the export of some rare earth minerals to the US, having previously limited mineral exports to the US the previous year.

Some commentators have described the US offer as “colonial”, but Kyiv is interested in joint exploration of its resources.

According to the World Economic Forum, Ukraine has about 20,000 mineral deposits covering 116 types, but only about 15% of sites were being actively exploited at the time of Russia’s full-scale invasion in 2022.

For instance, the country’s sizeable lithium deposits are still largely untapped. Likewise, rare earth deposits are known to exist, but none of them have yet been mined, because of a lack of investment.

Developing these mineral resources is extremely difficult and expensive, according to Iryna Suprun, chief executive of the Geological Investment Group, a mining advisory firm based in Ukraine.

She argues that if Ukraine can attract US investors to help develop its natural resources, it will be highly beneficial for the country’s economy.

“We will get technologies that our mining industry lacks so much,” Ms Suprun explained. “We will get capital. That means more jobs, tax payments. We’ll receive revenue from the development of mineral deposits.”