EXCLUSIVE REPORT : The Strategic Importance of Ukraine’s Mineral Wealth in the Context of Global Geopolitics


Ukraine, endowed with an abundance of mineral resources, stands as a pivotal player in the global landscape of raw materials. Its extensive deposits of fossil fuels, metals, and industrial minerals position the country as a significant producer of iron ore, coal, natural gas, oil, and more. However, the exploitation of these resources, particularly in conflict-affected regions, has sparked grave concerns among environmentalists and conservationists.

As Ukraine grapples with post-conflict recovery, the challenge of balancing economic ambitions with ecological preservation becomes increasingly urgent. This article examines the environmental risks associated with critical mineral exploitation in Ukraine, focusing on the mining activities at key deposits such as Kruta Balka, Malyshivske, and Perzhanske. It highlights the potential destruction of ecosystems, contamination of water sources, and disruption of biodiversity, illustrating the formidable challenges Ukraine faces in safeguarding its natural heritage while pursuing economic growth.

Ukraine’s Rich Mineral Resources: An Overview

Ukraine is home to a diverse range of mineral resources, including but not limited to:

  • Iron Ore: Ukraine ranks among the top producers of iron ore globally, with major deposits located in the Kryvyi Rih Basin.
  • Coal: The country possesses substantial coal reserves, primarily in the Donbas region, which is one of the largest coal mining areas in Europe.
  • Natural Gas and Oil: Ukraine has significant natural gas and oil reserves, particularly in the Dnipro-Donetsk region and the Black Sea shelf.
  • Metals and Industrial Minerals: The nation also has deposits of aluminum, copper, gold, titanium, zinc, and uranium, along with various industrial minerals like rock salt and sulfur.

The Geopolitical Significance of Ukraine’s Mineral Wealth

The geopolitical implications of Ukraine’s mineral wealth are profound. In a recent interview on CBS News’ “Face the Nation,” US Senator Lindsey Graham highlighted the strategic importance of Ukraine’s mineral resources. Graham noted that Ukraine sits on an estimated $10 to $12 trillion worth of critical minerals, positioning it as potentially the richest country in Europe. He emphasized that supporting Ukraine could yield significant economic benefits for the West, making Ukraine a valuable business partner.

Lindsey Graham’s Perspective on Ukraine’s Mineral Resources

Graham’s remarks underscore the strategic calculus behind Western support for Ukraine. By helping Ukraine now, the West could secure access to these vast mineral resources, which are crucial for various industries, including defense, technology, and energy. The prospect of harnessing these assets aligns with broader Western interests in reducing dependency on other global suppliers and ensuring a stable supply chain for critical materials.

Russian Perspective and Criticism

However, this perspective is not without controversy. Vladimir Dzhabarov, an official of the Russian Federation Council, criticized Graham’s comments, accusing him of treating Ukraine as a potential American colony. Dzhabarov argued that the West’s interest in Ukraine’s natural resources could lead to exploitation, with the US benefiting at the expense of Ukraine’s sovereignty and long-term development.

Scheme Table: Regional Distribution of Minerals in Ukraine (2024)

RegionMinerals Present
VolynskayaRock Salt, Brown coal/Lignite
ChernigovskayaCrude Oil, Gas, Rock Salt
SumskayaCrude Oil, Gas, Rock Salt
KharkovskayaCrude Oil, Gas
PoltavskayaRock Salt, Titanium, Crude Oil, Gas
ChernigovskayaCrude Oil, Gas, Rock Salt
CherkasskayaBrown coal/Lignite, Rock Salt
KirovogradskayaGold, Uranium, Lithium, Brown coal/Lignite
NikolaevskayaUranium, Rock Salt
DnepropetrovskayaZinc, Copper, Gold, Titanium, Iron, Uranium, Brown coal/Lignite
OdesskayaGold, Rock Salt
LvovskayaSulfur, , Brown coal/Lignite, Crude Oil, Gas
Ivano-FrankovskayaSulfur, Crude Oil, Gas
TranscarpathianGold, Rock Salt
ChernivtsiCrude Oil, Gas

Image : Critical Mineral Deposit in Ukraine – source analysis from CEOBS data

The Location and Status of Ukraine’s Critical Mineral Deposits: A Comprehensive Analysis

Ukraine is home to a diverse array of critical mineral deposits, playing a significant role in the global supply chain. The geopolitical tensions and military conflicts in the region have had substantial impacts on the accessibility and exploitation of these resources. This chapter provides a detailed analysis of the locations, operational status, and strategic significance of Ukraine’s critical mineral deposits, highlighting key investments, geopolitical implications, and future prospects.

Site nameIDLocation confidenceKey mineralAdditional mineralsExploration status
Dobra2HighLithiumScandium, tantalum, niobium, rubidium, tin, caesiumLicensed
Kruta Balka3HighLithiumBeryllium, tantalum, niobium, rubidium, tin caesiumAuction-ready
Stremyhorod12ModerateTitaniumScandium, vanadium, apatiteOperational
Zhelezniaky15ModerateCobaltNickel, copperAuction-ready
Prutivskyi16LowCobaltCopper, nickel, platinium group metalsLicensed
Mazurivske East18HighTantalumNiobium, zirconium, rare earth elements (REEs)Operational
Novopoltavske26HighTantalumNiobium, REEsAuction-ready
Mazurivske North28HighZirconiumNiobiumAuction-ready
Kapitanivske29HighChromiumNickel, cobaltOperational
Perzhansk32HighBerylliumTantalum, niobium, zirconiumOperational
Zhtorichenske33LowVanadiumScandium, titaniumAuction-ready
Deposit NameDeposit NumberMineral CompositionCurrent StatusLicence HolderInvestment AmountEnvironmental ConcernsStrategic Importance
Polokhivske1LithiumLicensedULMSeeking internationalComplex extraction, high costCritical for battery technology
Shevchenkivske4LithiumLicensedEuropean Lithium$1 billionProximity to frontlineHigh strategic value due to location
Dobra2Lithium, REEsLicensedEuropean LithiumAcquired from PetroConsulting LLC in 2023Coexistence with REEs poses extraction challengesSignificant due to mixed mineral composition
Burtynske22GraphiteOperationalOnur Group$50 millionGeneral mining impactsVital for industrial applications
Zavallivske19GraphiteLicensed until 2035Volt ResourcesLong-term rightsPotential water pollution from tailingsKey for graphite supply
Birzulivske5TitaniumOperationalVelta LLCOngoing developmentLand degradation risksLargest titanium processing facility in Ukraine
Yastrubetske25Zirconium, REEsLicensedBGV GroupSignificant investmentImpacts on local ecosystemsDiverse mineral portfolio
Kruta BalkaN/ALithiumOccupiedN/AN/APotential river ecosystem impactsHigh due to lithium content
MazurivskeN/ATantalum, Zirconium, Niobium, REEsOccupiedN/AN/AHigh infrastructure investment neededRich in multiple critical minerals
TroitskeN/AGraphiteOccupiedN/AN/AEnvironmental impact concernsSignificant graphite reserves

Mapping Ukraine’s Critical Mineral Deposits

A comprehensive mapping effort identified 37 critical mineral deposits across Ukraine. These include various minerals essential for modern technology and industry, such as lithium, graphite, titanium, and rare earth elements (REEs). The breakdown of the deposits is as follows:

  • Operational Deposits: 11 sites are currently operational, actively contributing to Ukraine’s mineral output.
  • Licensed but Non-Operational Deposits: 7 sites have been licensed to mining companies, but extraction activities have not yet commenced.
  • Deposits Ready for Auction: 19 sites are prepared for auction, with potential to attract new investments and commence mining operations.

Key Licensed Lithium Deposits

Lithium is a critical component in batteries and various other technologies. Ukraine’s lithium deposits are of significant strategic importance:

  • Polokhivske Deposit (Deposit 1): Licensed to Ukrainian Lithium Mining (ULM), this deposit is complex and costly to extract. ULM is actively seeking international investment to support its development.
  • Shevchenkivske Deposit (Deposit 4): Located near the frontline, this deposit has attracted interest from European Lithium, an Australian company ready to invest $1 billion.
  • Dobra Deposit (Deposit 2): This deposit contains both lithium and REEs. The licence, initially held by PetroConsulting LLC, was acquired by European Lithium in 2023.

Graphite Deposits and International Investments

Graphite is another critical mineral with substantial deposits in Ukraine. Significant investments have been made by international companies:

  • Burtynske Deposit (Deposit 22): Turkey’s Onur Group has invested $50 million to mine graphite here, controlling seven other mining assets in Ukraine.
  • Zavallivske Deposit (Deposit 19): Australian company Volt Resources has secured mining rights until 2035, showcasing their plans in London in June 2023.

Titanium and Other Critical Minerals

Ukraine’s titanium deposits are also noteworthy:

  • Birzulivske Deposit (Deposit 5): Velta LLC, a Ukrainian-US venture, has been developing this site since 2006 and also holds a licence for the Likarivske deposit (Deposit 13).
  • Yastrubetske Deposit (Deposit 25): The BGV Group, a Ukrainian-US partnership, holds licences for this zirconium and REE deposit, alongside other major deposits.

Occupied Deposits and Geopolitical Implications

The geopolitical landscape in Ukraine has led to the occupation of several mineral-rich territories by Russia since 2022. Key occupied deposits include:

  • Kruta Balka Lithium Deposit: A strategically important site now under Russian control.
  • Mazurivske Deposits: Rich in tantalum, zirconium, niobium, and other REEs.
  • Troitske and Mariupilske Graphite Deposits: These sites highlight the strategic value of Ukraine’s critical minerals.

At the peak of the occupation in 2022, it was estimated that over $12 trillion worth of Ukraine’s natural resources were under Russian control. The exploitation of these resources would require significant investment in infrastructure and personnel, posing substantial challenges. Furthermore, Russia’s exploitation of these resources for its benefit could constitute the crime of pillage under international law.

The Impact of the Full-Scale Invasion on Critical Mineral Exploitation in Ukraine: A Comprehensive Analysis

The invasion of Ukraine has significantly impacted the country’s critical mineral sector, stalling the development of its vast deposits due to investor hesitation and insufficient state funds for necessary infrastructure. The conflict has disrupted existing exports of critical minerals, further exacerbated by constraints on sea and rail transport. Despite these challenges, there have been concerted efforts to prepare for large-scale extraction for international markets once the war concludes. This preparation began with the signing of a Memorandum of Understanding on raw materials between Ukraine and the EU in July 2021, aimed at reducing reliance on Chinese imports.

In November 2022, the Ukrainian Geological Survey signed a partnership with the European Bank of Reconstruction and Development (EBRD) to digitize geological data and translate historical prospecting and survey documents into English. Subsequent changes simplified and accelerated Ukraine’s procedures for environmental impact assessments, and the EU’s Critical Raw Materials Act, passed into law in March 2024, further cemented these ties. Additionally, Ukraine’s government has actively encouraged foreign investment in its subsoils, as evidenced by numerous meetings throughout 2023, including at the Ukraine Recovery Conference. This has led to a significant increase in the number of special permits granted to exploit subsoil, with state revenue from these permits amounting to UAH2.3bn, or approximately $60m.

The geological landscape of Ukraine is rich in diverse mineral resources. Notably, the country has large deposits of titanium, lithium, graphite, and rare earth elements. These minerals are critical for the manufacturing of high-tech products, including batteries, semiconductors, and aerospace components. The strategic importance of Ukraine’s mineral wealth cannot be overstated, especially given the EU’s reliance on imports of critical minerals, particularly from China. This reliance underscores the need for alternative sources, with Ukraine positioned as a potential key player in the global supply chain.

Geopolitical Context and Strategic Importance

Ukraine’s critical minerals hold immense strategic importance due to their essential role in various industries, from electronics to renewable energy technologies and defense. The EU’s focus on reducing dependency on Chinese imports has intensified interest in Ukraine’s mineral wealth. The Memorandum of Understanding on raw materials signed in July 2021 marked a significant step towards establishing Ukraine as a reliable source of critical minerals for Europe. This agreement emphasized cooperation in areas such as exploration, extraction, processing, and recycling of raw materials, aiming to secure a stable supply of critical minerals for the EU.

Impact of the Invasion on Investment and Development

The full-scale invasion has created a highly volatile environment, causing investors to exercise caution. The uncertainty and risks associated with ongoing conflict have deterred significant investment in the development of Ukraine’s critical mineral deposits. Furthermore, the Ukrainian state, grappling with the economic strain of the war, lacks the financial resources to develop the necessary infrastructure for mineral exploitation. This has resulted in a significant slowdown in the progress of projects aimed at tapping into the country’s rich mineral reserves.

Disruption of Export Channels

The conflict has severely disrupted Ukraine’s export channels for critical minerals. Constraints on sea and rail transport have hindered the ability to move minerals out of the country efficiently. Ports, which are crucial for exporting minerals, have been under threat, and railway lines have faced interruptions due to the conflict. These logistical challenges have not only affected the export of minerals but have also impacted domestic industries that rely on these resources.

Domestic Demand and Military Applications

Despite the export challenges, domestic demand for critical minerals such as titanium has grown, driven by their numerous military applications. Titanium, for instance, is valued for its strength, lightweight properties, and resistance to corrosion, making it ideal for military equipment, including aircraft, missiles, and naval vessels. The increased demand for such materials within Ukraine has highlighted the importance of developing a robust supply chain, even amidst conflict.

Preparations for Post-War Extraction

Anticipating a future beyond the conflict, preparations for large-scale extraction of critical minerals for international markets have accelerated. The July 2021 Memorandum of Understanding with the EU set the stage for these efforts. This agreement aimed to reduce Europe’s reliance on Chinese imports and develop new strategic ties with Ukraine. In November 2022, the Ukrainian Geological Survey partnered with the EBRD to digitize geological data and translate historical prospecting and survey documents into English. These initiatives were crucial in creating a transparent and accessible database for potential investors.

Regulatory Reforms and Environmental Impact Assessments

In response to the need for a streamlined process to attract investment, Ukraine has implemented regulatory reforms to simplify and accelerate procedures for environmental impact assessments. These changes are designed to make it easier for foreign investors to navigate the regulatory landscape and invest in mineral extraction projects. The EU’s Critical Raw Materials Act, passed in March 2024, further strengthened these efforts by providing a legal framework to support sustainable and responsible sourcing of critical minerals.

Encouraging Foreign Investment

Ukraine’s government has been proactive in encouraging foreign investment in its subsoils. Throughout 2023, numerous meetings and conferences were held to attract potential investors. The Ukraine Recovery Conference, in particular, served as a platform for showcasing investment opportunities in the critical minerals sector. Ukrainian law firms have played a key role in providing strategic and legal guidance to investors, helping them navigate the complexities of investing in a conflict-affected region. The growing interest from international investors is reflected in the number of special permits granted for subsoil exploitation, which saw a 10% increase from 2021, with state revenue from these permits amounting to UAH2.3bn, or around $60m.

Strategic Partnerships and International Cooperation

Strategic partnerships and international cooperation have been pivotal in advancing Ukraine’s critical mineral sector. The partnership between the Ukrainian Geological Survey and the EBRD in November 2022 marked a significant milestone. The digitization of geological data and translation of historical prospecting documents into English have made Ukraine’s mineral resources more accessible to global investors. These efforts have been complemented by the EU’s Critical Raw Materials Act, which provides a regulatory framework to support sustainable and responsible sourcing of critical minerals from Ukraine.

Technological Advancements and Innovations

Technological advancements and innovations are crucial for the efficient extraction and processing of critical minerals. Ukraine has been exploring various technologies to enhance the efficiency and sustainability of mineral extraction. These include advanced geophysical methods for exploration, environmentally friendly extraction techniques, and the use of artificial intelligence and machine learning to analyze geological data. Such innovations are expected to play a significant role in maximizing the potential of Ukraine’s mineral resources post-conflict.

Economic Impact and Future Prospects

The economic impact of developing Ukraine’s critical mineral sector is substantial. The increased revenue from subsoil exploitation permits, amounting to UAH2.3bn in 2023, highlights the sector’s potential contribution to the country’s economy. Beyond immediate financial gains, the development of a robust critical mineral sector can create jobs, stimulate local economies, and drive technological innovation. Looking ahead, the successful exploitation of these resources will depend on continued international cooperation, investment, and the implementation of sustainable practices.

The critical mineral deposits in Ukraine represent a significant strategic asset with far-reaching implications for both the country’s economic future and the broader geopolitical landscape. The current conflict has stalled development, but substantial international interest and strategic preparations are laying the groundwork for post-war exploitation. The ongoing efforts to secure investments and streamline regulatory processes underscore Ukraine’s potential to become a key player in the global critical minerals market once stability is restored.

The Environmental Risks from Critical Mineral Exploitation in Ukraine

Ukraine, rich in critical mineral deposits, faces substantial environmental risks as it seeks to exploit these resources, particularly in areas occupied by Russia since 2022. This article delves into three key deposits: Kruta Balka, Malyshivske, and Perzhanske, examining the environmental threats posed by mining activities in these regions.

Kruta Balka Deposit

Kruta Balka, a complex Rare Earth Elements (REE) deposit, is located in an area occupied by Russia since 2022. This deposit, rich in lithium, tantalum, niobium, beryllium, tin, caesium, and rubidium, represents a lucrative mining prospect. However, the proposed mining operations would occur within an Emerald Network site and cross a close tributary of the River Berda, posing significant environmental risks.

The destruction of multiple threatened and valuable ecosystems is highly likely. These include unique Precambrian geoheritage sites and areas already experiencing water stress. The exploitation of Kruta Balka would exacerbate these issues, potentially leading to irreversible environmental damage.

Malyshivske Deposit

The Malyshivske titanium and zirconium deposit has been under development since 1961. In 2019, plans were announced for a new ore refinement facility, transport terminal, and two tailings ponds. The extraction was proposed to be expanded by up to 2.7 million cubic meters of ore-rich sands per year over the next 60 years.

This expansion would significantly increase the volume of mine waste, necessitating careful management near several surface watercourses in a highly productive agricultural area. The exploitation and disturbance of aquifers, likely to become important future water sources, is another major concern. The potential contamination and depletion of these water sources pose a significant threat to both agriculture and local ecosystems.

Perzhanske Deposit

The Perzhanske deposit, containing beryllium and REEs, was discovered in the early 1950s and mined until 1977. Renewed mining at this site threatens a rich and varied network of ecosystems at the confluence of several designated Environmental Impact Assessments (EIAs) within the wider Polissya wilderness, often referred to as ‘Europe’s Amazon.’

Part of the proposed mining area is located within the Polissya Nature Reserve, where mining is still prohibited. However, adjacent areas are not equally protected. The forests and wetlands in this region are rich in biodiversity, home to species such as beavers, moose, wolves, and various birds, including the great grey owl and the arctic loon. Threatened species like the European lynx, the European stag beetle, and the European pond turtle also inhabit these areas.

The wetlands in Polissya serve as important carbon sinks, and beryllium mining poses severe risks to these aquatic ecosystems. The proximity of Polissya to the Belarusian border highlights the impact of war on wildlife and conservation efforts in the reserve. Economic interests often overshadow environmental considerations during and after conflicts, and the rush to exploit Ukraine’s critical mineral deposits has raised concerns about the potential environmental damage.

Broader Environmental Impacts of Mining

The environmental impacts of mining are extensive and diverse. They include land degradation, soil erosion, subsidence, pollution of aquifers, landform destruction, and the contamination of soils, surface, and groundwater from mine tailings. Acid mine drainage from inadequate tailings management is a particular concern in Ukraine, exacerbated by the ongoing conflict.

Tailings management will be a key challenge for the mining industry and the Ukrainian state if new critical mineral deposits are exploited as part of rebuilding efforts. The environmental legacy of mining in Ukraine is already substantial, and the exploitation of new deposits risks further damaging environmentally sensitive areas.

Analyzing Critical Mineral Sites

Of the 37 critical mineral sites examined, several are in proximity to ecologically important areas and water bodies:

  • 19 deposits are within 1 km of an Ecologically Important Area (EIA);
  • 7 deposits are within 100 meters of an EIA;
  • 18 deposits are within 1 km of a surface water body (river, stream, or lake);
  • 5 deposits are within 100 meters of a surface water body.

The development of these prospective sites has the potential to impact wetlands, rivers, old-growth forests, and steppe. In agricultural areas, mining can encourage the conversion of unprotected land to agricultural uses to compensate for the land lost to mining activities. Authorities have already indicated their intention to convert such ‘rear’ regions to make up for the shortfall.

Case Studies and Historical Context

The environmental risks associated with the Kruta Balka, Malyshivske, and Perzhanske deposits highlight the broader challenges faced by Ukraine in balancing economic interests with environmental conservation. Historical degradation from industry and intensive agriculture, combined with recent damage linked to the ongoing conflict, has already placed significant strain on Ukraine’s ecosystems.

Kruta Balka: The proposed mining in this REE-rich region poses a direct threat to the Emerald Network site and the River Berda tributary. The destruction of ecosystems, unique Precambrian geoheritage, and exacerbation of water stress are significant concerns.

Malyshivske: The expansion of titanium and zirconium extraction at Malyshivske would increase mine waste management challenges near productive agricultural areas. The disturbance of aquifers and potential contamination of water sources could have long-term environmental and economic impacts.

Perzhanske: Renewed mining at Perzhanske threatens the Polissya wilderness, known for its biodiversity and carbon-sequestering wetlands. The impact on protected and adjacent areas, including species such as the European lynx and the European pond turtle, underscores the need for careful environmental considerations.

Environmental and Economic Balance

The rush to exploit Ukraine’s critical mineral deposits is driven by economic interests, particularly in the context of post-conflict rebuilding efforts. However, this must be balanced with the need to protect the country’s valuable and threatened ecosystems. Effective tailings management, sustainable mining practices, and robust environmental regulations are essential to mitigate the risks associated with critical mineral exploitation.

Current and Future Considerations

As of today, the situation in Ukraine remains complex, with ongoing conflict and economic pressures influencing decisions related to critical mineral exploitation. The potential environmental impacts of mining activities at Kruta Balka, Malyshivske, and Perzhanske must be carefully weighed against the economic benefits.

Recent updates indicate that international organizations and environmental groups are calling for stricter regulations and oversight of mining activities in Ukraine. The focus is on ensuring that environmental considerations are not overlooked in the pursuit of economic gains. This includes comprehensive EIAs, better management of mine tailings, and the protection of ecologically sensitive areas.

The environmental risks from critical mineral exploitation in Ukraine are significant and multifaceted. The Kruta Balka, Malyshivske, and Perzhanske deposits illustrate the challenges of balancing economic interests with environmental conservation. As Ukraine navigates the complexities of post-conflict rebuilding, it is crucial to prioritize sustainable mining practices and robust environmental protections to safeguard the country’s valuable ecosystems.

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