Ukrainian President Volodymyr Zelenskyy is traveling to the United States today to sign a deal on mineral development in Ukraine with President Donald Trump. What could that deal mean for both countries in terms of actual results? Bloomberg’s Mark Burton and Kate Sullivan explain:
But Trump’s focus on Ukraine’s commodities has also raised questions about what the nation really has to offer — for example it has no major rare-earth reserves that are internationally recognized as economically viable. It’s unclear to what extent the US may benefit, though the deal appears broader than first thought. Ukraine is an established producer of coal, iron ore, uranium, titanium, and magnesium, and expanding those sectors could be profitable for the US.
The proposal is to share revenue from future extraction of government-owned minerals and energy resources such as gas, as well as from terminals and port infrastructure, according to draft text seen by Bloomberg. That would apply to new projects rather than existing ones, and could require hefty investment in mines, as well as any processing facilities.
They continue later:
Some reports have suggested that Ukraine has mineral deposits worth at least $10 trillion, including lithium, graphite and titanium. But again, not much is known about how many are commercially viable.
Bulk commodities like coal and iron ore, as well as uranium, are perhaps the most logical deposits for the US to target. That’s because after building mines and extracting them, it’s easier to sell supplies straight into the market than other materials that require additional processing, like graphite and rare earths.
Processing such minerals outside of China would need investing in facilities, and often comes with environmental and technical issues. Another hurdle is that many commodities that Ukraine could potentially extract are currently well supplied globally, so prices may not be attractive enough to warrant large investment.
In terms of reserves, Ukraine is widely seen as being in the top 10 for coal, uranium and iron ore, but its costs of production may be significantly higher than the world’s leading suppliers. Natural gas — of which there are sizable reserves — and shale gas could potentially also be tapped.
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