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Leveraging critical mineral wealth for Ukraine’s economic recovery

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In contrast to most European countries, Ukraine boasts a diverse array of critical mineral deposits and is increasingly exploring their potential to aid in economic recovery. These critical minerals are essential for the production of high-tech devices, such as smartphones and laptops, as well as renewable energy technologies, including wind turbines, electric vehicles, and solar panels.

Global importance and supply chain vulnerabilities

Despite their global significance, the supply of critical minerals is vulnerable to disruption due to the concentrated nature of their extraction and production. While some minerals like copper are relatively widespread, others, such as cobalt, are found in economically viable concentrations in only a few locations. Moreover, critical mineral processing is predominantly centralized in China, which poses a risk of supply chain disruptions, as seen during the COVID-19 pandemic.

Ukraine’s strategic role

Given these risks and geopolitical imbalances, there is a growing focus on developing mineral sources closer to key markets like Europe. Ukraine’s critical mineral resources have thus garnered increased global interest. We mapped the locations of 37 critical mineral deposits in Ukraine using publicly available information. Of these, 11 are operational, seven are licensed but not yet operational, and 19 are ready for auction.

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Foreign investments and operational sites

Foreign investments are significant in Ukraine’s critical mineral sector. For example, Australian mining company European Lithium has expressed readiness to invest $1 billion in lithium mining in Ukraine and has obtained provisional licenses for the Shevchenkivske and Dobra deposits. Turkish company Onur Group has invested $50 million in graphite mining at the Burtynske site, and another Australian company, Volt Resources, holds mining rights for the Zavallivske graphite deposit until 2035.

Additionally, Velta LLC, a Ukrainian-US venture, has been developing the Birzulivske titanium site since 2006 and operates the largest titanium processing facility in Ukraine. The Ukrainian-US BGV Group has licenses for major graphite, zirconium, and rare earth elements (REEs) deposits.

Challenges in occupied territories

Seven of the 37 deposits are in territories occupied by Russia since 2022, complicating their exploitation. These include the Kruta Balka lithium deposit and the Mazurivske deposits, rich in tantalum, zirconium, niobium, and other REEs. Russia’s control over these resources has been speculated to play a role in its strategic interests, though exploiting these deposits poses significant logistical and legal challenges.

Impact of the invasion

The full-scale invasion of Ukraine has stalled the development of its critical mineral deposits. Investors are hesitant to commit to projects amidst the ongoing conflict, and existing exports are hampered by transportation constraints. However, efforts to prepare for large-scale extraction post-war have accelerated, particularly following the signing of a Memorandum of Understanding on raw materials between Ukraine and the EU in July 2021.

Environmental concerns

The rush to exploit Ukraine’s critical mineral deposits raises environmental concerns. Mining can lead to land degradation, soil erosion, water pollution from mine drainage, and contamination from mine tailings. Many deposits are located near ecologically important areas or water bodies, heightening the risk of environmental damage. Effective management of these environmental impacts will be crucial as Ukraine develops its mineral resources.

Conclusion

Ukraine’s rich deposits of critical minerals offer significant potential for economic recovery and strategic value amidst global supply chain vulnerabilities. However, balancing this potential with environmental protection and managing geopolitical challenges will be key to sustainable development in the post-conflict period.

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