As countries scramble to secure their own supply of critical minerals, Ukraine’s proven mineral reserves present the country with the opportunity to be a key player in this supply chain. Roman Opimakh writes that international business cooperation could help enforce peacekeeping. Investment from the US, EU, UK and other countries would become the best “iron dome” for Ukrainians.
Critical minerals, used as components in advanced technologies, are essential to enable the quantum leap, when computers become much faster than current ones. That will require a reliable energy supply and mighty microchips. That is why the countries with advanced mindsets are in the global race for natural resources, and it looks like they are dead serious.
Ukraine and the US agreed to the terms of the so-called rare earth minerals deal, which provides for the establishment of a joint-ownership reconstruction investment fund co-managed by both countries. The fund is designed to invest in mining, processing and logistics projects, attracting capital to develop public and private Ukrainian assets. Mineral resources will remain the property of Ukraine, and shares of the fund can’t be transferred without confirmation by all participants.
Ukraine will contribute to the fund 50 per cent of all new revenues from raw materials and energy resources, hydrocarbons and specifically identified critical minerals, and from the sale of related infrastructure assets owned by the state. Current sources of national revenues are not in the fund.
The fund is supposed to become an efficient vehicle to attract investment. The main idea is for investors to set up new projects that will bring revenues to the national budget. Half of the earned income will return to the fund to be reinvested in the Ukrainian economy.
The US framed this deal as a demonstration of solid interest in Ukraine, signalling support for Ukrainian stability. The arrival of foreign investment, including capital from the EU and likeminded countries, could become an anchor, attracting more sizable resources to Ukraine’s reindustrialisation, with new competencies in high-tech and innovative sectors.
What Ukraine has to offer
Today, Ukraine holds various mining investment opportunities, owning more than 30 deposits with proven reserves of critical minerals and hundreds of promising mineral occurrences. Moreover, the government manages a number of important industrial assets, where metallic titanium (sponge), aluminium, silicon, germanium and gallium were historically fabricated.
A number of private operators of licensed deposits have attended the main international forums with the aim of attracting strategic partners to co-develop their projects, and a couple of them have already applied for strategic status in the EU.
On top of critical minerals, another promising area of cooperation is the development of oil and gas resources – specifically, the Black Sea offshore fields, in which ExxonMobil and ENI were interested a decade ago, and unconventional hydrocarbons in the East and West of the country, where major international players like Shell and Chevron used to operate.
Turning deposits into profit
The grade of minerals is calculated as a percentage of the amount of extracted sand or mineral ore. Co-products such as precious elements account for a tenth or even a hundredth of a percent. Digging up resources and turning deposits and fields into profitable business projects is a challenge for most countries.
The development of a mining project for the extraction, processing and beneficiation of minerals, and the manufacture of at least semi-finished goods requires the construction of a complicated, high-tech complex, costing from $150 to 500 million and operating for 20 to 100 years. Offshore oil and gas drilling installations are estimated at $50 million in shallow water and over $100 million per well in deep water, accompanied by the building of pipelines, compressor stations and other necessary infrastructure on the South coast of the country.
Is geological information reliable?
The reliability of geodata can be considered high. Although most of the research was carried out during the Soviet period, the compiled geological reports contain information from thousands of drilled wells and laboratory analyses of core samples, which allows us to figure out the amount of reserves in the ground and their main mineral characteristics.
To my knowledge, the figures in legacy geological reports are comparable to the ones in modern international evaluations, which were done by private operators of lithium, graphite, and titanium deposits in recent years.
Additionally, international commercial evaluation systems of mineral deposits establish the volume of economically feasible extraction of raw materials. Basically, this depends on technology and commodities prices, which are a variable parameter over time. For instance, the cost of germanium was $1.8 thousand/kg in 2018 and over $4 thousand/kg in 2025, directly affecting the economics of any project. At the same time, the physical volume of the explored reserves of the deposit remains constant.
This does not mean that Ukraine should not carry out the evaluation of reserves according to the Australian Joint Ore Reserves Committee (JORC) or Canadian National Instrument (NI. 43-101) assessments. It means that Ukraine holds enough reliable data to affirm that the reserves are there, and it could be economically viable to bring them into production today or tomorrow, because rocketing technologies, growing prices for commodities and alarming security issues are a strong global game changer.
Cooperation mechanisms
Current legislation defines several ways of cooperation in the mining area: purchasing a new license at an online auction, participating in a tender for a sharing agreement and purchasing an issued license or a share of the firm-operator, including through the privatisation of state-owned assets.
The use of financial tools – such as securities – to pledge minerals as bank collateral in order to obtain the necessary project credit may also be applicable, but this is new for Ukraine. This might be an interesting task for BlackRock’s Aladdin analytical AI platform to get involved in.
All these regulatory tools have a number of advantages and disadvantages, so perhaps they will need to be legally improved. The obvious need is to simplify land parcel acquisition for license operators, as well as introduce attractive financial and economic incentives for the development of the processing and re-use of critical minerals. Ukraine’s business regulation has been streamlinedto make the country an attractive place of investment, and an easy place for international companies to do business.
I am confident that Ukraine’s recovery can be a win-win for the local economy and international partners. I believe that international business cooperation could turn into a solid peacekeeper for the country. US business and investment from the EU, the UK and other likeminded developing countries can become the best “iron dome” for Ukrainians.
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