The US Ukraine and the Battle for Rare Earths , A High Stakes Deal with Global Implications
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| US and Ukraine Near Rare Earths Deal: What’s at Stake? |
Ukrainian President Volodymyr Zelensky, in a video message, mentioned that both Ukrainian and American teams are diligently crafting a governmental agreement. He expressed hope for a fair outcome.
Initially, Zelensky rebuffed a U.S. proposal aiming to monopolize Ukraine's vital minerals as partial repayment for ongoing military and economic support in its conflict with Russia. Sources indicate the U.S. sought a 50% stake in Ukraine's critical minerals. While Zelensky didn't outright dismiss the offer, he noted it lacked essential security assurances for Kyiv.
Understanding Rare Earth Elements
Rare earth elements encompass 17 minerals crucial for manufacturing cell phones, electric vehicles, missile guidance systems, and various electronic, industrial, and energy applications. Despite their name, these elements aren't particularly scarce but are challenging and environmentally taxing to extract and refine. This complexity has led to production being heavily concentrated in a few regions, notably China.
Ukraine's Mineral Wealth
Per The Guardian, Hanna Levintseva, head of the Geological Society of Ukraine, stated in 2022 that Ukraine harbors about 5% of the world's mineral resources, despite occupying a mere 0.4% of Earth's surface. This richness stems from its intricate geology, encompassing all primary components of the Earth's crust.
Ukrainian data, as reported by Reuters, reveals that Ukraine boasts deposits of 22 out of 34 minerals deemed critical by the European Union. These include rare earth elements like lanthanum, cerium, neodymium, erbium, and yttrium.
Before the onset of the war with Russia in February 2022, Ukraine was a significant tungsten supplier, accounting for approximately 7% of global production in 2019, according to European Commission research. The country also claimed 500,000 tonnes of lithium reserves and produced a fifth of the world's graphite, essential for nuclear power plants.
The Strategic Importance of Critical Minerals
Critical minerals are indispensable for producing high-tech products, especially those pivotal for transitioning to green energy, as well as consumer electronics, artificial intelligence infrastructure, and weaponry.
The global push to address climate change and reduce reliance on fossil fuels has intensified the demand for minerals like cobalt, copper, lithium, and nickel, vital for transportation and wind energy solutions. These minerals are also integral to mobile phones, AI data centers, and military equipment, such as the F-35 fighter jet.
As the global economy and technology evolve, the value of these critical minerals has surged, heightening geopolitical competition for access.
In 2022, the U.S. Geological Survey identified 50 minerals, ranging from aluminum to zirconium, as essential to national security, economic prosperity, renewable energy development, and infrastructure.
Notable among these are arsenic, used in semiconductors; beryllium, vital in the aerospace and defense sectors; cobalt, lithium, and graphite, crucial for battery production; indium, enabling touch-responsive screens; and tellurium, employed in solar power generation.
The International Energy Agency estimated in 2023 that the energy sector's transition metals market reached £320 billion in 2022, doubling its value over five years. Should countries fully implement their clean energy and climate commitments, demand is projected to more than double by 2030 and triple by 2040.
Defining Critical Minerals
The term "critical minerals" is more political than scientific, with different nations curating their lists based on domestic and geopolitical priorities.
Trump's Interest in Ukraine's Rare Earths
President Trump's keen interest in acquiring Ukraine's rare earths is largely driven by concerns over China's dominance in this sector. China has established itself as a global manufacturing hub, making rare earths a pivotal point in the supply chain.
China controls a significant portion of the world's rare earth processing capacity. According to the International Energy Agency, China's share of refining stands at about 35% for nickel, 50-70% for lithium and cobalt, and a staggering 90% for rare earth elements.
Securing a deal with Ukraine would not only diversify the U.S. supply chain but also reduce dependence on Chinese processing capabilities, aligning with broader strategic and economic objectives.