Gain perspective on US president Donald Trump's ambitions in Ukraine's rare earth minerals and the potential impact on supply chain development
US president Donald Trump is still targeting Ukraine’s rare earth minerals as a form of recompense for financial aid from Washington since 2022, an endeavour that perplexes many in the industry given that Ukraine does not have any notable rare earth reserves. So what is going on and what effect could Trump’s ambitions in Ukraine have on supply chain development?
The language of nonferrous metals often trips people up — does the US really mean rare earths or rare metals? The former is a specific category that encompasses 17 chemically similar metallic elements — the lanthanides plus scandium and yttrium — while the latter is a vague term of no fixed definition, often referring to an assortment of minor metals and rare earths.
When politicians use these terms, we must allow for the possibility that they do not mean exactly what they say — we cannot know for sure. What we do know is that although Ukraine has a variety of mineral deposits, it is not rich in viable, scalable rare earth sites.
And bear in mind that Trump wants scale — $500bn worth of rare earths, to be precise. It is difficult to put an exact monetary value on the rare earths market, and analysts naturally arrive at different figures, but most estimates for 2024 stand at $4bn-12.5bn globally. It would therefore be astonishing for Ukraine to conjure up $500bn worth.
So what of the rare earth element (REE) deposits that Ukraine does have? It is possible that some light rare earth elements contained in monazite might be accessible via mineral sand deposits. And some phosphate deposits do contain radioactive components that could align with the presence of rare earth elements, according to industry experts.
Ukraine’s REE deposits have not been subject to in-depth studies, partly because the mining industry has prioritised more readily available commodities such as iron ore, coal and titanium feedstocks. So it is possible that more could come to light, but not $500bn worth.
It is also notable that even during the most recent major rare earth price boom — which ran from late 2020-March 2022 and saw exploration companies enthusiastically snap up and try to develop new supply sources around the world — no-one made a play for Ukraine. It is one thing to have REEs in the ground, but it is quite another to have a commercially viable deposit.
Any new production site in Ukraine would also run into the same long list of challenges faced by any new rare earths project. These challenges — the severity of which is evident by the scarcity of commercial-scale rare earth producers outside China — are extensive, ranging from high costs to technological hurdles and problems handling radioactive materials.
Even if Ukraine could start extraction and built processing and concentration plants locally, the usual inevitable supply chain questions would arise. Who does the separation, metallisation and magnet manufacturing? Some could take place in the US but not at the scale Trump appears to envision — the capacity simply does not exist and would take many years to build.
The status quo for most international REE miners is still to send ores to China for those mid and downstream processes. But that would fly in the face of US efforts to reduce reliance on China for rare earths and permanent magnets, as demonstrated by Trump’s new 10pc import tariff on Chinese rare earths.
It is also unclear whether China’s imports of rare earth ores will continue as normal — at the time of writing, Beijing has just drafted plans to introduce new rare earth regulations that contain a proposal to start including imported ores within China’s rare earth mining quota. If implemented, this could result in China cutting imports to prioritise domestic mining instead.
What the rare earth market needs now — with supply outpacing demand and prices still at loss-making levels for many companies — is probably fewer ores coming out of the ground and a greater focus on building those mid and downstream processing capacities outside China.
Pushing Ukraine to extract enormous volumes of raw minerals that it probably does not even have is not the answer to the US’ supply chain vulnerabilities. That energy would be better spent supporting viable existing projects in the US and allied countries, speeding up permitting processes and getting funding to where it can make the biggest difference.
Author: Ellie Saklatvala, Senior Editor, Metals
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