The Value of Ukraine’s Critical Minerals Is Overstated

With considerable foresight, Ukrainian President Volodymyr Zelenskyy used the D-Day ceremonies in France in June to lobby a key Trump ally and rare Republican supporter of aid to Ukraine, Senator Lindsay Graham. Zelenskyy told him that Ukraine’s minerals were worth as much as US$12 trillion.

‘If we help Ukraine now, they can become the best business partner we ever dreamed of’, Graham said. ‘That $10 to $12 trillion of critical mineral assets could be used by Ukraine and the West, not given to Putin and China.’

Graham repeated those comments after leading a Senate delegation to Kyiv, a few weeks before Zelenskyy travelled to the US last September. Zelenskyy’s visit was controversial: the Republican leader of Congress, Mike Johnson, refused to meet him, and Trump was expected to do the same.

After making a personal appeal to Trump, Zelenskyy was granted an audience at Trump Tower in New York. During this meeting, he evidently sold the idea of a minerals partnership, mentioning the potential revenue of US$500 billion.

Ukraine doubled down on these claims at this year’s World Economic Forum in Davos, Switzerland, where its delegation spoke of critical mineral reserves worth US$12 trillion. Trump took the bait, but Zelenskyy could not close the deal, despite guidance from Graham on how to handle Trump ahead of the ill-fated televised meeting on 28 February.

While Trump responded to the appeal of large numbers, the reality of critical minerals mining, and particularly rare earths, is that it is painstaking work. It takes years to prove up deposits, to determine how to process them, to secure customers and then, and only then, to raise the capital for development.

Australia has been discussing collaboration with the US on critical minerals ever since former prime minister Malcolm Turnbull’s first meeting with Trump in February 2018.

There has been follow-up: the US Department of Defense helped fund a Lynas joint venture to process heavy rare earths in Texas; the US Export-Import Bank provided conditional letters of intent to lend $1.3 billion to two Australian rare earths miners; and there has been collaboration between Geoscience Australia and the US Geological Survey.

The Albanese government agreed on the Climate, Critical Minerals and Clean Energy Transformation Compact with former president Joe Biden in May 2023. However, it was not formally ratified by US Congress ahead of the new administration, which will likely not appreciate the compact’s climate change focus.

While Japanese government support was pivotal to the success of Lynas, the Australian government has been left to put up the risk capital behind the development of recent Australian rare earths processing capacity.  There has been no influx of US risk capital.

David Uren is an ASPI senior fellow. This article is published courtesy of the Australian Strategic Policy Institute (ASPI).