Game-Changing: Critical Minerals Deal Could Transform US Mining Sector

Supply Chain Vulnerabilities

Ukraine’s mineral wealth has been a key factor in its negotiations with the U.S. as the two countries work out details for a ceasefire agreement in Ukraine’s war with Russia. After a rocky start to those negotiations, officials from the U.S. and Ukraine announced an agreement on March 11, 2025. The U.S. would resume support and intelligence sharing with Ukraine, with some conditions, and both agreed to work toward “a comprehensive agreement for developing Ukraine’s critical mineral resources to expand Ukraine’s economy and guarantee Ukraine’s long-term prosperity and security.” The initial announcement from Ukraine’s government stated that critical minerals would also “offset the cost of American assistance,” but that line was removed from the joint statement. Getting Russia to agree to a ceasefire would be the next step.

There’s no doubt that Ukraine has an abundance of critical minerals, or that these resources will be essential to its postwar reconstruction. But what exactly do those resources include, and how abundant and accessible are they? The war has severely limited access to data about Ukraine’s natural resources. However, as a geoscientist with experience in resource evaluation, I have been reading technical reports, many of them behind paywalls, to understand what’s at stake. Here’s what we know. Ukraine’s minerals fuel industries and militaries. Ukraine’s mineral resources are concentrated in two geologic provinces. The larger of these, known as the Ukrainian Shield, is a wide belt running through the center of the country, from the northwest to the southeast. It consists of very old, metamorphic and granitic rocks. A multibillion-year history of fault movement and volcanic activity created a diversity of minerals concentrated in local sites and across some larger regions. A second province, close to Ukraine’s border with Russia in the east, includes a rift basin known as the Dnipro-Donets Depression. It is filled with sedimentary rocks containing coal, oil and natural gas. Before Ukraine’s independence in 1991, both areas supplied the Soviet Union with materials for its industrialization and military. A massive industrial area centered on steelmaking grew in the southeast, where iron, manganese and coal are especially plentiful. By the 2000s, Ukraine was a significant producer and exporter of these and other minerals. It also mines uranium, used for nuclear power. In addition, Soviet and Ukrainian geoscientists identified deposits of lithium and rare earth metals that remain undeveloped. However, technical reports suggest that assessments of these and some other critical minerals are based on outdated geologic data, that a significant number of mines are inactive due to the war, and that many employ older, inefficient technology. That suggests critical mineral production could be increased by peacetime foreign investment, and that these minerals could provide even greater value than they do today to whomever controls them.

Critical minerals are defined as resources that are essential to economic or national security and subject to supply risks. They include minerals used in military equipment, computers, batteries and many other products. A list of 50 critical minerals, created by the U.S. Geological Survey, shows that more than a dozen relied upon by the U.S. are abundant in Ukraine. A majority of those are in the Ukrainian Shield, and roughly 20% of Ukraine’s total possible reserves are in areas currently occupied by Russia’s military forces. Critical minerals Ukraine currently mines. Three critical minerals especially abundant in Ukraine are manganese, titanium and graphite. Between 80% and 100% of U.S. demand for each of these currently comes from foreign imports. Manganese is an essential element in steelmaking and batteries. Ukraine is estimated to have the largest total reserves in the world at 2.4 billion tons. However, the deposits are of fairly low grade – only about 11% to 35%.

Economic and Technological Implications

Post-War Reconstruction

The economic impact of utilizing Ukraine’s minerals for reconstruction and modernization cannot be overstated. The country’s mineral wealth can provide a significant boost to its economy, creating jobs, stimulating industrial growth, and generating revenue. For instance, the reconstruction efforts in the post-war period will require substantial amounts of steel, which Ukraine can produce domestically using its abundant manganese reserves. This will not only reduce the need for imports but also create new economic opportunities within the country.

Moreover, the development of Ukraine’s rare earth elements (REEs) and other critical minerals can play a crucial role in the modernization of its infrastructure. REEs are essential for the production of advanced technologies such as electric vehicles, wind turbines, and smart grids. By harnessing its mineral resources, Ukraine can position itself as a key player in the global market for these technologies, driving innovation and growth.

Technological Innovation

Control over critical minerals can drive significant advancements in technology and support industrial growth. For example, the development of REEs can lead to the creation of more powerful and efficient batteries, which are crucial for the electric vehicle industry. As the world transitions towards sustainable energy, the demand for REEs is expected to surge. Ukraine, with its substantial reserves of REEs, can become a major supplier, thereby fostering technological innovation and economic growth.

Additionally, the extraction and processing of these minerals can lead to the development of advanced mining technologies. Ukraine can invest in research and development to improve mining techniques, making the process more efficient and environmentally friendly. This can also create new opportunities for collaboration with international tech companies, further driving technological advancements.

It’s important to note that the race to locate, secure, develop, and monetize rare earth minerals has been accelerating for years now. Estimates of the minerals in North America stand at about 3.6 million tons in the United States and more than 14 million tons in Canada, according to the U.S. Geological Survey, and the United States is the second-largest producer in the world after China. Australia and Burma are other major producers. But in 2023, China, which produces about 60 percent of all rare earths in the world and processes nearly 90 percent, rattled global markets when it announced a ban on rare earth extraction and production. That set off alarm bells in the West, where lawmakers and policymakers worried that Western technology would be crippled by a lack of supply of rare earth minerals. China further jolted the discussion on February 3 — the same day Trump spoke to reporters — when it slapped tariffs on a range of U.S. goods in retaliation for tariffs announced over the weekend by Trump. Beijing also imposed export controls on some rare earth elements.

Political and Strategic Considerations

Peace Talks and Mineral Access

The role of mineral resources in the ongoing peace negotiations is significant. The Ukrainian government has indicated that the development of these resources could offset the cost of American assistance, although this point was later removed from the joint statement. The ongoing race to make batteries smaller and lighter, and more powerful and longer-lasting, involves the use of rare earth minerals. Defense industries also need the minerals for weaponry and related technology. Other rare earth minerals are used as chemical catalysts in magnets, computer drives, or generators. The biggest hurdle for rare earth extraction is that you have to dig up a lot of soil to get an adequate amount of the minerals because they’re in such trace amounts. And then you have to separate out and refine them before you can employ them in technology or machinery. Ukraine has substantial amounts of rare earth minerals, according to the Ukrainian Geological Survey. It also has less-rare, more abundant minerals that are also coveted for use in technology and cutting-edge industries: lithium, for example, which is used widely in batteries of all sorts, and titanium, which is used in airplane manufacturing. Some estimates say the country’s lithium deposits could be valued at billions of dollars. Trump may also have been referring to these minerals; he did not make that clear. For the record, Ukraine also has far greater deposits of other, more common mineral resources — coal, iron ore, oil and gas – which provide major revenues for the country and also major investment opportunities. Many of those resources are located in parts of Ukraine that are occupied by Russian forces — and may ultimately end up under total Russian control.

Geopolitical Implications

Control over these minerals influences the geopolitical dynamics between the U.S., Ukraine, and Russia. The U.S. interest in Ukraine’s mineral resources is driven by the need to secure a stable supply of critical minerals, which are essential for both economic growth and national security. The U.S. has long been reliant on foreign imports for many of these minerals, particularly from China. By partnering with Ukraine, the U.S. can reduce this dependency and enhance its strategic position in the global market.

For Ukraine, developing its mineral resources is crucial for its economic recovery and long-term security. The country has the potential to become a major player in the global mineral market, which can attract significant foreign investment and foster economic growth. However, this also comes with challenges, as Ukraine will need to navigate complex geopolitical dynamics and ensure that its resources are used for the benefit of its people and its long-term prosperity.

Challenges and Future Prospects

Mining Infrastructure and Technology

The need for modernizing mining infrastructure and adopting advanced extraction technologies is paramount. Many of Ukraine’s mines are currently inactive or employ outdated technology, which limits their efficiency and environmental sustainability. Investing in modern mining infrastructure and adopting advanced technologies can significantly enhance the country’s mining capabilities, making it a more competitive player in the global market.

For instance, the adoption of automated mining technologies can improve safety, reduce operational costs, and increase productivity. Additionally, investing in environmental technologies can help mitigate the environmental impact of mining, making the industry more sustainable. This is particularly important given the environmental concerns associated with mining activities.

International Cooperation

The importance of international collaboration and investment in developing Ukraine’s mineral resources cannot be overstated. Ukraine will need significant foreign investment to modernize its mining infrastructure and adopt advanced technologies. International cooperation can provide the necessary capital, expertise, and technological support to help Ukraine develop its mineral resources effectively.

Furthermore, international cooperation can help Ukraine navigate the complex geopolitical landscape and ensure that its resources are used for the benefit of its people. This can involve partnerships with other countries, international organizations, and private sector entities. By fostering international cooperation, Ukraine can attract the necessary investment and support to develop its mineral resources and achieve long-term economic prosperity.

Policy Recommendations

For U.S. Authorities

To enhance critical mineral production, the U.S. should consider the following policies:

• Strategic Partnerships: Establish strategic partnerships with Ukraine to develop its mineral resources. This can involve joint ventures, technology transfer, and investment in mining infrastructure.
• Research and Development: Invest in research and development to improve mining technologies and environmental sustainability.
• Regulatory Support: Provide regulatory support to facilitate mining activities and attract foreign investment.
• Diplomatic Engagement: Engage in diplomatic efforts to ensure that Ukraine’s mineral resources are used for the benefit of its people and its long-term prosperity.

For Ukrainian Authorities

To enhance critical mineral production, Ukrainian authorities should consider the following policies:

• Infrastructure Development: Invest in modernizing mining infrastructure and adopting advanced technologies.
• Foreign Investment: Attract foreign investment by providing a stable regulatory environment and incentives for investors.
• Environmental Sustainability: Invest in environmental technologies to mitigate the environmental impact of mining activities.
• International Cooperation: Foster international cooperation to attract investment, expertise, and technological support.

Future Outlook

Looking ahead, Ukraine’s mining industry holds significant potential. The country’s abundant mineral resources, combined with the right investment, technology, and regulatory environment, can position Ukraine as a major player in the global mineral market. This can drive economic growth, create jobs, and foster technological innovation.

However, Ukraine will need to navigate the challenges associated with modernizing its mining infrastructure, adopting advanced technologies, and ensuring environmental sustainability. International cooperation will be crucial in this regard, as it can provide the necessary capital, expertise, and technological support.

In conclusion, the future of Ukraine’s mining industry is promising, but it will require strategic planning, investment, and international cooperation to fully realize its potential. By leveraging its mineral wealth, Ukraine can achieve long-term economic prosperity and contribute to global mineral markets.