There is currently a lot of confusion over US President Donald Trump’s proposed $500bn deal to gain control over Ukraine’s rare earth metals wealth. The problem is that Ukraine doesn’t have any rare earth minerals; it has a lot of “strategically important metals” like lithium. That is true. But actual rare earth metals? No. Almost none.

At the danger of nitpicking, rare earth metals (REMs) are a group of 17 elements in the periodic table, consisting of the 15 lanthanides (including neodymium, dysprosium, terbium, scandium and yttrium), which are very useful, as they enable the production of sophisticated electronics thanks to the conductivity quirks of their chemical bonds when used in combination with more traditional materials.

But things like lithium and graphite (a form of carbon) – which can be found in abundance in Ukraine – are not included in the REM categorisation. Nevertheless, Ukraine is a treasure trove of these strategically important minerals and metals that are also very important in making modern technology; lithium is crucial to the making of powerful batteries. Ukraine is home to around 20 of the 31 minerals that Europe lists as strategically important, as it doesn’t have significant deposits of its own.

A deep dive by Bloomberg Opinion columnist Javier Blas, released on February 19, went into the distinction between the two and undermined Trump’s assumption that Ukraine holds trillion of dollars of valuable minerals.

“What Ukraine has is scorched earth; what it doesn’t have is rare earths. Surprisingly, many people – not least, US President Donald Trump – seem convinced the country has a rich mineral endowment. It’s a folly,” Blas wrote.

Senator Lindsey Graham’s estimate that Ukrainian has $2-$7 trillion-worth of metals and minerals seems like a vast overestimate, as collectively the strategic metals and minerals that Ukraine actually does have are worth, at the most, $775bn in total, according to bne IntelliNews estimates, – comprising mostly lithium, titanium and copper.

And that is all potential. Most of these riches are still in the ground. The current value of Ukraine’s strategic metal and mineral exports from existing production was not more than $100mn in 2024.

All the attention has been on Trump’s demand for 50% of all revenues in his harsh February 14 minerals deal, whereas the attention should be on where the tens of billions of dollars of investment will come from to construct the mines and processing plants needed to turn Ukraine’s mineral potential into a reality. Investors into these projects are unlikely to see a dividend payout for years after ground is broken on any of these projects.

But while Ukraine’s mineral wealth has been widely misnamed, that doesn’t mean its considerable mineral resources are not important and valuable.

Non-rare earth metal deposits

Trump has got it wrong. Ukraine doesn’t have rare earth metals, but it does have a lot of other valuable, and in demand, minerals, of which lithium and graphite are the most important and copper and titanium the most valuable. But the current volume of production of all its minerals is tiny and the value of existing exports amounts to not more than $100mn a year. Building a fund to get to $500bn worth of revenues is a currently unrealistic without massive investment, if then.

This mistake has been made before. The New York Times famously reported in 2010 a Pentagon assessment of Afghanistan's mineral wealth, estimating it at $1 trillion, and called the country the "Saudi Arabia of lithium." This story was based on a 1980s Soviet geological survey, itself excavated in 2004 by the Americans from the Afghan archives, and not hands-on geological surveys conducted by US geologists.

During the US occupation of Afghanistan no major mining projects were undertaken and since then the estimates of its mineral wealth have been quietly downgraded. So far the Taliban have signed off on only one mining concession with the Chinese. A similar thing appears to be happening in Ukraine.

Lithium: Still, Ukraine has the largest deposits of lithium in Europe. The soft metal is key to the battery industry and EV business. These are primarily located in regions such as Kruta Balka, Dobra and Shevchenkivske, the biggest and which contains an estimated 12-14mn tonnes of lithium carbonate equivalent. However, it is also on the front line and in danger of falling under Russian control. The Kruta Balka deposits are in the Zaporizhzhia region, which is also partially under Russian control.

Despite the promising potential of Ukraine’s lithium production, Kyiv has yet to even begin exploiting its deposits. So far it produces no lithium and exports nothing. It remains a potential. Still, the total reserves of an estimated 500,000 tonnes are worth between $10bn and $12.5bn at current prices – still far away from the $500bn that Trump is demanding.

Graphite: Ukraine also boasts considerable graphite reserves, essential for applications in batteries, fuel cells, and as a lubricant in various industries. The country's sole natural graphite producer, Zavalivsky Graphite, suspended operations in December 2024 as the Armed Forces of Russia (AFR) advanced towards its mines and the annual production of 10,000 tonnes per year (tpy) has fallen away to next to nothing now. In the first eleven months of 2024 Ukraine exported 2,870 tonnes of graphite, worth less than $7mn.

Lithium and graphite are the potential big money markers, but their low valuations call into question the “trillions of dollars” valuation being pushed by US Senator Graham or the Nato Energy Security Centre of Excellence in Lithuania.

Titanium: Ukraine is among the top global producers of titanium-bearing minerals like ilmenite and rutile, which are used in producing titanium metal for aerospace, military and medical applications. Despite its production capacity, the country lacks facilities to produce titanium sponge, the form required for advanced industries.

Ukrainian reserves of titanium account for approximately 7% of the world's total, or around 52mn tonnes, making it the largest reserve holder in Europe, but almost all of it remains in the ground and much of it in territory controlled by Russia. In theory if the entire reserves were exploited they would be worth $421bn but in 2024 Ukraine’s titanium concentrate exports were down by more than a third (37%) year on year and worth a mere $11.6mn, and the country will never capitalise on the full value of its titanium exports, unless it invests in the capability to make titanium sponge – something that Russia did long ago and which will remain Kyiv’s main rival in this business.

Uranium: The nation holds significant uranium reserves of 107,200 tonnes, accounting for about 2% of the world's total identified resources. However, like almost all countries that have uranium ore reserves, it has no refining capacity, which is dominated by Russia. Exports of uranium ore, without first refining it into yellow cake NPP fuel enriched ore, are low.

As part of the global shift towards clean energy, Ukraine’s exports of uranium ore spiked in 2023 by 250% y/y, but those exports were still only worth $29mn in total.

Cobalt and nickel: These metals are crucial for battery production and various industrial applications. Ukraine's deposits of cobalt (8.800 tonnes, 0.5% of the world’s reserves) and nickel (215,00 tonnes, 0.4% of the world’s deposits) are collectively worth $3.6bn at current prices.

Copper: Essential for electrical wiring and electronics, copper deposits in Ukraine add to the country's portfolio of critical minerals, but currently Ukraine does not produce any copper at all.

Ukraine is believed to possess the fourth largest reserves of copper in Europe, or less than the leader, Poland, with 36mn tonnes of copper. These reserves are primarily located in the Rivne, Zhytomyr and Volyn regions, with approximately 150 known copper occurrences identified,

Precise figures for Ukraine’s copper reserves are unavailable, but Poland’s reserves are worth $340bn, and Ukraine’s reserves are some fraction of that.

Strategic, not rare, minerals

Despite their name, most rare earth metals are not actually rare in the Earth's crust. But they are difficult to extract and refine economically due to their geological dispersion.

Here is another problem: although China is bereft of significant mineral deposits of any kind, except REMs, it has built up a massive processing and refining capacity for REMs by investing in mines all over the world, and currently dominates global supplies, accounting for 80% of global production.

China is home to 44mn tonnes of REMs, just under half of the world’s total of proven deposits, with Vietnam (22mn tonnes), Brazil (21mn tonnes) and Russia (10mn tonnes) holding most of the rest, reports Bloomberg. Three of the top four deposits of REMs are in BRICS countries and Vietnam is not exactly the US’ best buddy.

Russia has played a similar game with uranium. Russia is not alone in having large deposits of uranium ore, but it has also built up a dominant position in the global supply of the extremely costly refining of uranium into the so-called yellow cake enriched variety that is used as fuel by nuclear power plants (NPPs).

The fear is that both China and Russia will use their stranglehold over the supply of these minerals and metals as a weapon in the geopolitical war currently raging between East and West.

China imposed export restrictions on gallium and germanium in August 2023, citing national security concerns. That was clearly a warning shot, following the CHIPS act restricting technology imports to the US, of what it could do if a full-blown trade war broke out between the two. These two elements are crucial for semiconductor manufacturing, military applications and telecommunications.

The US also banned the import of Russian uranium, on which it remains highly dependent to fuel its fleet of NPPs. Except it didn’t, as it doesn’t produce more than a fraction of what the US NPPs need, and in parallel introduced a system of waivers that allow US NPPs to import as much Russian yellow cake as they need until 2028.

The primary difference between rare earth metals and elements such as lithium lies in their chemical properties and applications. Lithium is an alkali metal rather than a rare earth metal. It is highly reactive, lightweight and primarily used in lithium-ion batteries for electric vehicles and energy storage. In contrast, rare earth metals are essential for manufacturing permanent magnets (used in wind turbines and electric motors), phosphors (for LED screens) and catalysts (in industrial and automotive applications).

Not what it seems

China and Russia already represent a strategic threat to the US’ self-proclaimed desire to stay at least one, if not two, generations ahead of the of the rest of the world in high-tech. China in particular already has the ability to smother US tech development simply by restricting exports of its REMs, says Blas. And though often presented as essential to high-tech applications and weapons production, “their uses are far more prosaic.”

Trump as usual seems to have deluded himself, saying on February 3 that Ukraine has “very valuable rare earths.” That was followed by Senator Lindsey Graham, who has been a driving force in selling Trump the minerals deal.

“People don’t talk much about it, but you know, the richest country in all of Europe for rare earth minerals is Ukraine. $2-$7 trillion-worth of minerals that are rare earth minerals, very relevant to the 21^st century. Ukraine is ready to deal with us, not the Russians,” Graham told Fox News at the end of last year. Ukraine has no significant rare earth deposits other than small scandium mines, according to Blas.

“At best, the value of all the world’s rare-earth production rounds to $15bn a year – emphasis on “a year.” That’s equal to the value of just two days of global oil output. Even if Ukraine had gigantic deposits, they wouldn’t be that valuable in geo-economic terms,” says Blas.

That makes Trump’s demand that Ukraine sign off on a $500bn minerals deal a fantasy. If Ukraine were miraculously to produce 20% of the world’s rare REMs, that would still only bring in some $3bn a year, so it would take 167 years for the deal to earn the mooted $500bn total.

While REMs are crucial in the production of modern highest technology gadgets, the amount of these metals actually used in such production is tiny. Although the cost per kilo of these metals can be extraordinary high, the few grams of REMs that are actually needed to make the widgets work is tiny, so their contribution to the cost of production is negligible. That is why only a handful of players have been prepared to invest the tens of millions into refining production to make them; and China has invested as much for strategic reasons as commercial.

There is even a question mark over the economic viability of mining what rare earth metals Ukraine has. One of the few confirmed REM deposits is at Novopoltavske (tantalum, niobium, strontium and magnetite), which was discovered by the Soviets in the 1970s, but even the government says it is “hard to extract” and has remained fallow since then.

Blas goes on to point out that the original confusion over the distinction between REMs and simply strategically important minerals can be traced to a report by the Nato Energy Security Centre of Excellence, based in Lithuania, which bears the Nato logo but is actually an autonomous entity.

The document is provocative: “Ukraine emerges as a key potential supplier of rare earth metals such as titanium, lithium, beryllium, manganese, gallium, uranium…”

“The list should ring every alarm. Anyone with a passing knowledge of chemistry knows none of those minerals are rare earths,” says Blas.