Ukraine mineral reserves likely too small to spur foreign miner rush: report

Persistent security concerns and widespread skepticism over the size of Ukraine’s mineral reserves mean Western resource investment in the country is unlikely to take off anytime soon even if a much-publicized deal with the United States materializes, a new report concludes.

Resource company executives worry it would be impossible to guarantee the safety of workers and operations in Ukraine for the years required to turn new mines and drilling fields into profitable ventures, analysts at New York-based Eurasia Group said in a research note published Tuesday. What’s more, many miners doubt that Ukraine has the resources — especially untapped reserves — to justify investing, the geopolitical consulting firm said.

U.S. and Ukrainian government officials have been locked in negotiations over a minerals investment accord for weeks as part of an attempt by Washington to end Russia’s three-year-old war in Ukraine. Among other demands, Washington is reported to be insisting on the creation of a joint investment fund that would split the income from Ukraine’s hydrocarbon and mineral resources between the two countries.

“Miners and oil and gas producers — especially well-capitalized U.S. and multinational companies — are unlikely to invest without some further and unlikely breakthrough in resolving the war,” the Eurasia Group analysts wrote. “The prospects for big new mineral, oil and gas finds there are too small and the safety risks too large to support what is estimated to be a decade or two of work to develop new Ukrainian mines and drilling fields.”

Decades to develop

While some U.S. estimates have put Ukraine’s mineral wealth at $12 trillion, little recent prospecting has been done and any projects would take years if not decades to develop. The country produces some titanium, gallium and neon, and holds zirconium, graphite, lithium and uranium.

To be sure, some foreign investors have already expressed interest in developing Ukraine’s mineral resources. They include U.S.-backed investment fund TechMet, which is keen to develop a lithium project in central Ukraine.

Although U.S. President Donald Trump appears “fixated” on rare earth elements, even referring to his “rare earth deal” with Ukraine, the former Soviet republic has very little of those minerals apart from a few small scandium mines, Eurasia Group said.

Rare earth elements are a group of 17 metals — such as cerium, lanthanum, lutetium, scandium, ytterbium and yttrium — that are considered critical ingredients for the energy transition.

Few if any of Ukraine’s untapped deposits are known to be large enough or of high enough quality to be competitive globally, Eurasia Group said. As a result, some foreign miners have already ruled out investing in Ukraine, the consulting firm said.

Executives say it would take a lot of new evidence to show that Ukrainian deposits could be competitive, Eurasia Group said without identifying the individuals. Some are frustrated by the lack of information about the country’s reserve potential, the firm added.

Surveys lacking

Ukrainian geological surveys – some of which date back to the Soviet era – are often outdated. Without survey data to guide exploration, new ventures would have to start from scratch — another hurdle for projects that were already considered too long and costly.

“Many company executives have a ballpark estimation that it would take 20 years to develop a new project in Ukraine; they regard anything less than 10 years as impossible,” Eurasia Group’s analysts wrote.

To make matters worse, some of Ukraine’s potential mineral and oil and gas deposits are located in an area now occupied by Russian forces — which means they would stay under Russian control after any cease-fire agreement. Other deposits are in Ukrainian-held areas where infrastructure has been badly damaged.

Besides, Trump’s proposed minerals deal provides no security guarantee beyond his administration’s assertion that the U.S. investments would deter future Russian attacks, Eurasia Group said. The proposal also treats U.S. aid since 2022 as a debt that Ukraine must repay through the revenue generated from all mineral deposits, including oil and gas.