Rare Earth Riches in Ukraine: Myth or Untapped Potential?

Most of the resources are based on Soviet-era reports. They are outdated - many were made prior to 1991. Ukraine has some deposits of rocks that contain rare earth elements, but nobody has done a proper assessment of those rocks in terms of grade and tonnage. All the suggestions from the reports discussed online indicate that both the tonnage and the grade are not that impressive for these materials.

The source for the myth of Ukraine's epic mineral riches was a November 2024 report from the Ukrainian Geological Survey called "Ukraine Critical Minerals Portfolio," which mistakenly refers to rare and rare earth metals such as tantalum, niobium, and beryllium - none of which are rare earth metals.

Earlier this year, President Donald Trump pursued an agreement with Ukraine to access its substantial mineral resources, framing it as a way to balance US aid contributions to the country. Initially, he proposed $500 billion as a claim on Ukraine's mineral wealth, later revising this to $250 billion following negotiations and feedback.

Ukraine reportedly possesses a diverse range of critical minerals, including rare earth elements like neodymium and dysprosium, as well as lithium, titanium, graphite, and uranium - resources essential for technology, energy, and defense industries. However, the potential of these deposits is tempered by challenges such as outdated infrastructure, ongoing conflict, and restricted access to regions under Russian control. Critics argue that even if these rare earth minerals are accessible, extraction would be extremely expensive, and many deposits are currently in Russian-controlled territory.

Joining the discussion is Professor Michael McKibben, a geochemist and economic geologist at UC Riverside. He co-authored the 2023 US Department of Energy report, advises the geothermal industry on lithium extraction, and has served on the National Academy of Sciences panel on critical mineral recovery.

Host: What do you think about this deal and how feasible is this project?

Prof. McKibben: I'm naturally skeptical, and I'm very skeptical about the accessibility and quality of the resources being claimed.

As many listeners probably know, to officially qualify as reserves, targets or deposits have to be drilled out, and the drill cores have to be assayed for metal content at frequent intervals. Then you need a careful assessment of the economics of extraction - mining costs, market conditions, price trends, revenue projections - and you need to demonstrate that extraction is viable over a mining timeframe of one year to decades.

There are several international standards one needs to follow to define exploration results, mineral resources, and mineral reserves, especially for companies listed on securities exchanges:

• JORC - Australian Joint Ore Reserves Committee
• PERC - Pan-European Reserves and Resources Reporting Committee
• SAMREC - South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves
• CRIRSCO - Committee for Mineral Reserves International Reporting Standards
• NI 43-101 - Canadian Institute of Mining and Metallurgy's National Instrument
• SK-1300 - US Securities and Exchange Commission's Modernized Mining Disclosure Rules

I currently serve on the CIM subcommittee that is updating NI 43-101 reporting guidelines for lithium brines, because the current standard only covers solar brines but not emerging lithium resources such as oil field brines or geothermal brines.

Some states and provinces also have their own reporting standards. These reports must be prepared by a Qualified Person or Certified Person - a mineral industry professional like a geologist or mining engineer with specific qualifications and membership on a government-approved board.

None of that applies to the Ukrainian reports. Most of the resources are based on Soviet-era reports made prior to 1991, before all of these international mineral reserve reporting standards were issued - a development driven by famous stock market investment scandals like the Bre-X Gold fraud in the 1990s.

The earlier Soviet reports may be based only on surface outcrops and geological mapping, not necessarily on any exploration drilling and assaying. Some of the old analytical methods may no longer be sufficient. For example, to fully characterize rare earth elements in ore, you need inductively coupled plasma mass spectrometry (ICP-MS) - a modern analytical technique that was not available back then.

Host: Isn't this a bit like a Schrodinger's cat situation? Back then, many minerals were not discovered or even considered important. So technically, it is possible that Ukraine actually has more to offer than what is even in these Soviet-era reports. The problem is that it was never evaluated according to modern practices. And moving forward, how are they going to do that in a safe and reliable manner?

Prof. McKibben: One thing I recently posted on LinkedIn was a map that The HALO Trust generated. They are a nonprofit that helps nations train their citizens to demine farmlands after wars and conflicts. They made a map that overlays the locations of landmines and unexploded ordnance in Ukraine with the reported mineral deposit occurrences. It is a pretty scary map.

Just like farmers, most mining companies do not want to send their personnel and equipment into post-war areas that have not been carefully cleared of dangerous military ordnance.

I can give you an example from my own state of California. There is a mountain range east of the Salton Sea called the Chocolate Mountains that has been used by our military for decades for target practice. Mining companies are not allowed to explore those mountains even though we suspect they contain potentially valuable gold deposits. There is too much unexploded ordnance on the ground. It would be very expensive and time-consuming to clean all that up just to allow exploration.

Cleaning up valuable Ukrainian farmland so it can produce salable crops soon after is one thing, but cleaning up an area for potential future mineral exploration and mining - with a revenue timeline of years to decades - is not very attractive as an investment.

Host: Is there any indication that there are actually rich minerals that can be used as rare earth minerals? You mentioned that Ukraine does not actually have rare earth minerals - what did you mean by that?

Prof. McKibben: They have some deposits of rocks that contain rare earth elements, but nobody has done a proper assessment of those rocks in terms of grade and tonnage. All the suggestions from the reports I have seen discussed online indicate that both the tonnage and the grade are not that impressive.

There was a great article published in The Spectator in February by Owen Matthews that explains very clearly that the source for the myth of Ukraine's epic mineral riches was the November 2024 Ukrainian Geological Survey report called "Ukraine Critical Minerals Portfolio." It mistakenly refers to rare and rare earth metals such as tantalum, niobium, and beryllium - which are not rare earth metals. It is really designed like an investment pitch, trying to present Ukraine as an investment destination for future partners. The intention was apparently to engage with the newly elected Trump team in Washington.

Weeks later, this message was amplified by another report from a Lithuanian-based NGO which, although not formally affiliated with NATO, calls itself the NATO Energy Security Centre of Excellence. This report likewise mistakenly claimed that Ukraine's minerals were vital for nations aiming to lessen reliance on non-democratic countries. It was a flashy brochure that claimed Ukraine is a key potential supplier of "rare earth metals" including titanium, lithium, beryllium, manganese, gallium, uranium, thorium, graphite, apatite, fluorite, and nickel - none of which are rare earth metals. Apparently, as intended, the Trump administration took the claimed rare earth element bait.

Host: There are rare earth minerals and there are strategic minerals. Sometimes they are used interchangeably, but the list of what is considered critical or strategic keeps getting updated depending on development and innovation. Canada, for example, updates this list regularly.

Prof. McKibben: You are right. Various countries and even various government organizations within individual countries periodically issue lists of what are called critical minerals - I actually prefer the old term "strategic minerals." That list can change over time as technology evolves.

The US Department of Energy has one list, the US Geological Survey has another, and the US Department of Defense has yet a third - and they are slightly different. Things involved in ammunition, weapons, and ordnance for the Department of Defense make for a very different list than the one focused on the energy transition, green energy, and electric vehicles.

Minerals that appear on one list might not appear on another, and minerals on one country's list might not appear on another country's. But everybody recognizes the broad importance of the rare earth elements - lanthanum to lutetium. Those are the 15 elements defined as the rare earths.

The name is confusing. They were called "rare earths" not because they were rare, but because they were very hard to extract from rocks and to separate from each other, since each has very similar chemical bonding properties due to their electron orbitals.

Prof. McKibben: Most of the rare earth elements and lithium occurrences in Ukraine are in very hard rock - pegmatite and granitic rocks. That is very different from deposits being mined economically today, particularly lithium from brines (solar, oil field, and geothermal brines).

One of the biggest rare earth element mines in the world historically has been the Mountain Pass Mine in California. That is carbonate rock - very easy to dissolve with acid and extract the rare earth minerals. But Ukraine, in many ways, has the same problem Greenland has: whatever rare earth elements it seems to have are in very hard granitic rocks, which is going to be very costly and expensive to process.

It was Molycorp that originally developed very complex ion and solvent exchange chemical processing methods to separate the rare earths into their various oxide components at Mountain Pass Mine, which at one time produced most of the world's rare earth elements. Unfortunately, Molycorp was careless about letting foreign geologists and metallurgists into the mine and its processing plant. The Chinese were able to learn enough to develop a competing domestic rare earth deposit at Bayan Obo and clone the relevant American metallurgical processes. That is why the US lost its dominance in rare earth elements to China towards the end of the last century.

Host: How feasible is it to conduct new exploration and evaluation, even if a ceasefire is achieved?

Prof. McKibben: That comes down to what risks companies want to take in sending personnel into a post-war area with the risk of landmines and unexploded ordnance.

Then there are other risks. The legal and regulatory framework for mining may be inconsistent in Ukraine as they transition from wartime governance to post-war reconstruction, creating uncertainty for companies and investors regarding permits, environmental regulations, and dispute resolution. There are also possibilities that recent wartime decisions made in haste may be less transparent and accountable.

Host: How does Ukraine's mining law system work?

Prof. McKibben: In the centrally planned economies of the former Soviet Union and Eastern Europe, it was the state that typically held all mineral rights and controlled all phases of mineral development. Many of these former communist countries now seem to be returning to privatization of land and resources.

That is very different from the West, which follows both the regalian and the common law traditions:

Regalian (civil law): Derived from Roman times, the government controls all resources regardless of who owns the land surface. The government authorizes exploration, development, and mining through a concessionary system and collects royalties or taxes on mineral production. French, German, Spanish, and South American mining laws follow this tradition.

Common law: Provides for private ownership of land and the right to extract minerals from land you own. The owner may lease or sell mineral rights together or separately. British, Canadian, Australian, and South African mining laws traditionally follow this model.

The US is a confusing mix of both traditions, depending on whether the resource is metallic or non-metallic and whether the landowner is the government or a private individual - a legacy of the General Mining Law of 1872.

This legal unfamiliarity could be another challenge for US mining interests wanting to come into Ukraine.

Host: A lot of strategic minerals are also under Russian control now. Is this a proper evaluation issue or is there actually a significant portion of minerals in those territories?

Prof. McKibben: We know from reports that Russia currently controls the largest lithium deposit and some of the potential rare earth element deposits in the Zaporizhzhia and Donetsk regions. They control up to 40% of most other mineral deposits in Ukraine, including most of the gas and coal reserves.

Do we really expect these territories to be turned over to exploration by foreign entities? Many news reports say Russia is currently stalling on agreeing to any ceasefire, partly to consolidate its military hold on Ukraine's resources.

A company could go in, develop a mine and extraction facilities, and then face the risk of losing everything. That kind of geopolitical risk is not unique - things like that have happened throughout history, and there are many countries where it is very risky to conduct business.

Host: In countries like Mali and other African nations rich in minerals, it is risky to conduct business, yet companies still do it. What plays the bigger role - the risk of military operations or the question of how fast you can profit?

Prof. McKibben: These are difficult decisions that companies make all the time. In the 1970s and 1980s, there was a wave of nationalization of resources in Central and South America by countries achieving independence from European settlers. These governments nationalized their copper and other resources and kicked the mining companies out. While that seemed like a good idea at the time, in the long run, it damaged their economies because they could not process the materials the way international mining companies were able to. It was a bad move that damaged interest by the mining community in going back to mine those resources. They have somewhat recovered from those mistakes, but nationalization was a big deal that companies worry about and have to plan for.

Host: One expert from the Canada-Ukraine Chamber of Commerce suggested that you basically just need one company to be successful, and then other companies will follow to replicate that success.

Prof. McKibben: There is some truth to that. Somebody has to be bold, and then others will follow. But we are talking about a situation with a lot of military debris on the ground, and that is going to complicate all of this and make corporate decisions more challenging.

Host: How much investment are we talking about?

Prof. McKibben: It seems like it would require almost a Marshall Plan approach, where the US funded cleanup after World War II. The same kind of thing would have to happen in Ukraine, and that is certainly going to cost billions of dollars. The question is whether there are billions of dollars worth of resources justifying that.

We could do it for moral reasons - to help Ukraine get back on their feet - but then there is also the economic argument. If we help them and our companies get opportunities to mine their mineral resources, you have to balance the expense with potential revenues.

For example, the market for rare earth elements is only about a $10 to $12 billion per year market, and China dominates it right now. Is there $10 to $12 billion worth of rare earths in Ukraine that could be economically mined? I doubt it.

Most major gold mining companies do not want to look at anything less than a million ounces - it is simply not worth their time and investment. The same calculation has to be made with rare earth deposits. What is the investment, and what is the revenue going to be?