WP: Ukraine doesn’t produce rare earths “and probably never will”

The U.S. deal for rights to extract minerals in Ukraine strengthened a frayed diplomatic relationship, but its value in the global competition for metals to build things like weapons, electronics and batteries is highly uncertain, ‘The Washington Post’ stresses.

Citing logistical and economic barriers, industry specialists said it will take at least a decade to yield benefits to the strained U.S. supply chain for coveted resources. Actual shipments of titanium, graphite and lithium that are important for advanced manufacturing lie on a distant horizon. The pact will be of little help, the experts said, as China’s control over the metals is creating mounting economic and national security worries.

“This absolutely is not a solution to these immediate problems,” said Reed Blakemore, a director at the Atlantic Council Global Energy Center. “It does not resolve any of the vulnerabilities we see related to China’s dominance over these supply chains in the short term.”

The deal, which includes a fund to finance Ukraine’s reconstruction, gives the United States rights to extract metals, oil and gas. Profits generated by the U.S. would count as repayment for future U.S. military assistance to Kyiv.

But mining companies are hardly clamoring to get into Ukraine, a country where there has been little invested in even the most basic work to identify resources. Firms that might be reviewing the possibilities are stuck with outdated, Soviet-era geologic surveys of underground deposits, industry officials say.

Ukraine also is not a known source of any of the 17 “rare earth” metals that have become an Achilles’ heel for U.S. manufacturers. China is imposing export controls on its own supplies, threatening to starve U.S. factories making electronics and weapons systems.

Experts said the oil and gas opportunities are likely to be limited. Energy firms have alternative places to extract gas, where the infrastructure is already developed and the risks of investing are lower.

“There are a lot of factors that would make U.S. companies cautious when it comes to oil and gas in Ukraine,” said Ben Cahill, an energy scholar at the University of Texas at Austin. He said a lot of the gas reserves are in the conflict zone, where firms would be reluctant to invest, even in the event of a peace deal.

“I’m not convinced that larger companies that have opportunities around the world will see this as a competitive place to invest,” Cahill said. “Perhaps some smaller, independent companies may be willing to take the risk.”

“The best case would be a new mine gets constructed 10 years from now, and some of what is extracted makes its way downstream to industry in the U.S.,” said Ashley Zumwalt-Forbes, who was a deputy director for batteries and critical materials at the Energy Department during the Biden administration. “This deal doesn’t move the needle on our mineral supply chains.”

The profit margins on mines are extremely narrow, and investors look for places where there is low security and political risk, and the locations of specific metals have been thoroughly mapped. None of that applies to Ukraine, according to Zumwalt-Forbes.

“We struggle to raise money for mineral exploration in places like the United States, Canada and Australia,” she said. “Think how much harder it will be to raise money for these earlier-stage activities in Ukraine.”

Just getting reliable data around what is in the ground requires extensive drilling, meaning costly investment in heavy machinery and crews. The process is known in the industry as “greenfield exploration.” Zumwalt-Forbes said mining executives call greenfield exploration “the world’s worst casino.”

Getting minerals out of the ground is only part of the challenge the U.S. faces in resolving its supply chain woes. Processing them is an even bigger hurdle. It is environmentally messy work with a low profit margin.

“U.S. supply chain problems largely result from processing and not mining of minerals, and the agreement, as far as I have seen, does not specify that Ukraine will become a processing depot,” said an email from Emily Holland, research director and an assistant professor at the Russia Maritime Studies Institute at the U.S. Naval War College. Processing plants, she said, require considerable energy and transportation infrastructure, and much of that has been badly damaged in Ukraine.

And, Holland wrote, “processing minerals in Ukraine isn’t exactly convenient for US markets, especially if the administration is seeking to on-shore final production of goods.”

As the Trump administration pushed for a minerals deal earlier this year, the industry publication Mining Journal reported that Ukraine boasts about its reserves.

Trump was talking publicly about extracting from Ukraine $500 billion worth of “rare earths.” The publication pointed out that Ukraine doesn’t produce rare earths “and probably never will.”

The administration has toned down its talk of Ukraine solving the U.S. rare earths conundrum.

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