What difficulties await investors who are interested in the mineral deal between Ukraine and the US?

The agreement on joint investment in Ukrainian subsoil does not yet promise quick profits. The agreement encompasses all types of resources, from oil and gas to various metals and minerals. While Ukraine does possess these deposits, most remain insufficiently explored or are in areas temporarily occupied by Russia.

For example, one of the main deposits of rare earth elements – Novopoltavske – has not been explored since the Soviet era and is situated near the front line. The situation is similar with lithium. According to experts, about 40% of Ukraine’s metal resources are currently under Russian control.

While the war continues, it is challenging to assess the actual value of these resources and the agreement’s potential. Moreover, due to the war most of the enterprises that could extract or process minerals are not operational or have not been included in the agreement. In fact, Ukraine must establish its entire production infrastructure from scratch.

An additional challenge lies in further processing the minerals to a state suitable for industrial use. For instance, rare earth elements are particularly difficult to purify – this is mainly conducted in China. Uranium requires enrichment, and titanium ore needs processing to a state suitable for aviation.

Compounding this issue is the fact that Russia is a key player in the processing of titanium and uranium. In 2023, it accounted for over 25% of the enriched uranium used in the US.