Published by Global Banking & Finance Review®
Posted on February 28, 2025
8 min readLast updated: January 25, 2026
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Ukraine's mineral wealth remains untapped as a U.S.-Ukraine deal faces political and security challenges, delaying potential mining operations.
By Pratima Desai, Olena Harmash
LONDON/KOPANKY, Ukraine (Reuters) -On snow-covered fields in central Ukraine, where some of the country's biggest proven lithium deposits are located, a small team of ecological consultants drop sensors into holes in the earth to measure water levels.
The environmental survey, contracted by the small Ukrainian mining company that holds the license, UkrLithiumMining, comes years ahead of any mining operations at the undeveloped site.
It underlines how much work is still to be done before a proposed minerals deal between Ukraine and the United States generates significant revenue for either side.
U.S. President Donald Trump and Ukrainian President Volodymyr Zelenskiy met in Washington on Friday to oversee the sealing of the deal, but the leaders engaged in an angry exchange of words of words before the world's media and left the agreement unsigned.
Trump had said a deal could be America's way of earning back some of the money it has given to Ukraine in the form of financial aid and weaponry to help fight Russia, which invaded three years ago. But the clash in the Oval Office cast the agreement's future into doubt.
A senior U.S. official told Reuters afterwards that Trump had not ruled out a deal, but not until Ukraine was ready to have a constructive conversation.
For Denys Alyoshin, chief strategy officer of UkrLithiumMining, an agreement would be a step in the right direction because U.S. engagement makes Ukraine less vulnerable to Russian aggression in the longer term, he said.
But without some form of Western security guarantee developing the Polokhivske lithium deposit would be tough, he said. The deposit - one of the largest in Europe - is located just 240 km (149 miles) northwest of the frontline with Russia.
"Before the war broke out, I had a lot of commercial negotiations with ... investors who were interested in the project," Alyoshin told Reuters. "But when the war started ... a rational CEO would not go to a country where there is a war, they would go to Zimbabwe, Canada or Africa. There are many places to go where there is no war."
Despite repeated requests from Zelenskiy, the Trump administration has offered Kyiv no security guarantee. That has raised doubts over the commercial feasibility of developing deposits of rare mineral resources, used in high-tech devices and batteries, given the risks of a return to war even if a ceasefire is agreed with Russia this year.
A draft of the minerals deal, reviewed by Reuters, contained reassuring language but no guarantees of security. It focused instead on the creation of a joint U.S.-Ukraine managed "Reconstruction Investment Fund" to which Kyiv will contribute 50% of revenues of future monetization of state-owned natural resources.
Furthermore, the terms of the deal are broad and further negotiations will be needed to pin down details, four experts told Reuters.
Even if a lasting peace returns to Ukraine, UkrLithiumMining needs to raise $350 million and requires at least 1.5 years to conduct a feasibility study before it can start building a mine and enrichment plant, Alyoshin said.
"It means we will be able to reach steady stage production ... it can be 2029."
The next U.S. presidential elections are due to take place in 2028, and Trump, the champion of minerals cooperation as a means of securing peace, would be constitutionally barred from running again, having served one term already.
However, seven mining executives and industry analysts told Reuters that Alyoshin's timeline is optimistic. Exploration periods are typically four years; a feasibility study would take another year before the construction of a processing plant can even begin.
"The reality is that most lithium deposits in Ukraine were identified in the Soviet era and we haven't had any real updates or exploration for many years," said Federico Gay, analyst at Benchmark Mineral Intelligence (BMI), a London-based specialist information provider for the supply chain of lithium-ion batteries used in electric vehicles.
"Even if everything stacks up, it would take a minimum of eight years for the Polokhivske deposit to be developed to the stage where it is producing usable lithium," he said.
Moreover, the deposit is deep and may require up to $800 million just to construct the mine and concentrator, said Gay, who added that another $1 billion investment would likely be needed to produce the lithium compounds needed for batteries.
Despite the challenges, Alyoshin said his company eventually planned to produce about 1.5 million tonnes of raw ore a year and process that into 300,000 tonnes of petalite concentrate - a more lithium-rich substance.
With additional investment, Alyoshin added the concentrate could be further refined to produce 22,000 tonnes of battery-grade lithium carbonate.
The specifics of planned production and processing timelines at the Polokhivske deposit have not been reported previously.
CLASSIFIED RESERVES
Demand for the minerals is high. Lithium is used in electric vehicle batteries, while rare earths are used in everything from auto motors to wind turbines to advanced military weapons systems.
But turning Ukraine's reserves of lithium and rare earths into operating mines and constructing processing facilities is a mammoth undertaking, according to more than 10 analysts and mining industry experts.
Ukraine's economy ministry and the prime minister's office did not immediately respond to requests for comment for this article.
Ukraine does not produce any rare earths but, according to Ukraine's Institute of Geology, possesses large deposits of such minerals, including lanthanum, cerium, neodymium and yttrium. Detailed data about those reserves is classified.
Private investors might be wary of a deal in which the U.S. received mined minerals in return for security guarantees, protection from future Russian attacks and aid. The mining industry would normally use royalty deals as a way to get financing from investors in return for a percentage of revenues from sales once production begins.
Any deal by Trump to access Ukraine's critical minerals won't get the United States anywhere close to challenging China's sizeable advantage in those key minerals, while he is in power.
"Yes, it's a counter to China, but you've still got the problem of where the minerals are going to be processed and how long it's going to take," said Julian Kettle, Vice Chair Metals and Mining at natural resources consultancy Wood Mackenzie.
"Ukraine produces titanium and it has extensive graphite and lithium deposits. You can expand production at existing mines. But when it comes new frontier development, discovery to delivery of material could take up to 10 years."
China is already the world's third-largest lithium producer, after Australia and Chile. It is also the world's top producer of rare earth elements, which include neodymium used to make strong, light, powerful permanent magnets used in defense equipment.
U.S. Geological Survey (USGS), a government agency, does not provide details of lithium production in the United States. It estimated 45,000 metric tons of rare earth oxides in mineral concentrates were produced last year - which would make the U.S. the second-largest concentrate producer after China.
But the gap is large. According to USGS, China mined 270,000 metric tons of rare earth elements last year or 69% of the global total. And it has an even tighter stranglehold over the processing of rare earths - a complex and polluting process.
Many companies that mine rare earth minerals still have to send their concentrate to China to be processed, meaning Beijing produces more than 90% of the world's rare earth elements.
MORE NEGOTIATION TO BE DONE
Dominic Raab, head of global affairs at Appian Capital Advisory, a private equity firm that invests in mining companies, said he viewed the deal between the U.S. and Ukraine as a positive step forward in helping fund Ukraine's redevelopment.
"There's plenty more due diligence and negotiation to be done,"said Raab, who previously served as former deputy prime minister and foreign secretary for the United Kingdom.
Appian would be interested in investing in Ukraine's minerals projects were there more information on the country's geological potential, Raab said.
Ukraine has deposits of 22 of the 50 minerals classified as critical by the U.S. government and has significant deposits of lithium, graphite, titanium, uranium used to generate nuclear power, alongside rare earth elements, according to BMI.
"Ukraine hasn't been mapped in 30 years. There's so much more to be done before we get to a phase of advanced exploration in Ukraine," said Gracelin Baskaran, director of the critical minerals security program at the Center for Strategic and International Studies, an American think-tank.
But she said that mining - which consumes around one-fifth of energy globally - required robust electricity infrastructure: "Ukraine has been bombed out. It's not really a competitor given the state of infrastructure and a huge security risk."
(Reporting by Pratima Desai in London and Olena Harmash in Kyiv; additional reporting by Thomas Peter in Kopanky and Ernest Scheyder in Houston; editing by Veronica Brown, Mike Collett-White and Daniel Flynn)
The proposed minerals deal between Ukraine and the U.S. is still in the negotiation phase, with no security guarantees provided by the Trump administration, raising doubts about its commercial feasibility.
UkrLithiumMining faces significant challenges, including the need to raise $350 million for a feasibility study and the requirement for at least 1.5 years before starting mining operations.
The ongoing war and lack of Western security guarantees make it difficult for Ukraine to attract investment for mineral development, leaving it vulnerable to Russian aggression.
Alyoshin stated that with additional investment, the Polokhivske deposit could produce about 1.5 million tonnes of raw ore annually, which could be refined into 22,000 tonnes of battery-grade lithium carbonate.
Lithium is crucial for electric vehicle batteries and other technologies, and demand for it is high as countries transition to greener energy solutions.
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