Highlights
- Ukraine has $16 trillion in rare earth element reserves.
- Most deposits are currently inaccessible due to ongoing Russian occupation.
- China dominates 70-80% of rare earth processing.
- Ukraine’s potential contribution is minimal in the short to medium term.
- Significant investment, processing infrastructure, and geopolitical stability are required for Ukraine to leverage its rare earth resources.
There has been significant buzz around Ukraine’s estimated $16 trillion worth of rare earth elements (REEs), a treasure trove of strategic minerals that power everything from smartphones to fighter jets. But is this supposed goldmine really a game-changer in the global rare earths market? A closer look suggests that Ukraine’s rare earths might not even matter—at least not anytime soon.
The Geography Problem: War and Russian Control
What is the biggest problem with Ukraine’s REE deposits? As Rare Earth Exchanges has reported from the onset of the discussion, most of them are in Russian-occupied territory. That means even if Ukraine wanted to start mining and exporting, they physically cannot access much of these reserves as long as the war rages on. Even if the war were to end tomorrow, the country would still need years—if not decades—to rebuild infrastructure, secure mining sites, and develop processing capabilities.
The Processing Problem: China’s Near-Monopoly
This media has consistently reported that access to deposits is but one of a series of prerequisites toward a more diversified rare earth element supply chain future.
Even if Ukraine miraculously gains control of its deposits and starts mining, there’s still another massive bottleneck: processing. China controls 70%+ (some reports are 80%+) of the world’s rare earth refining capacity and has been tightening its grip, restricting exports of key minerals and technologies. The U.S. and its allies have been scrambling to develop alternative supply chains, but these efforts take time and require enormous investment. Without an industrial policy on this topic, matters will only go more slowly.
Ukraine simply doesn’t have the expertise, infrastructure, or capital to challenge China’s dominance in processing rare earths.
The Investment Problem–who Dares to Bet on Ukraine?
Developing a competitive rare earths industry requires billions of dollars in investment—something Ukraine is unlikely to attract while missiles are still flying. As the report rightly points out, no rational investor would pour money into a sector that could be wiped out overnight by a Russian strike. Even after the war, Ukraine’s economy will be in recovery mode, and securing the kind of long-term investment required for mining and processing will be an uphill battle.
The Leverage Problem–Ukraine’s Unrealistic Demands
Ukraine knows its rare earths are valuable, but it is also holding out for an unrealistic deal. President Zelensky has already rejected a U.S. proposal that would have given American companies 50% control over the sector, demanding instead national security guarantees alongside a lucrative financial package. However, given the risks and uncertainties, Ukraine has little bargaining power. The U.S. wants rare earths, but it also has other options, including Australia, Canada, and domestic production efforts or continuing to pursue Greenland and the like (again, the processing and refining and magnet production issues ensue).
The China Factor: Indifference, Not Concern
Some might think that China is sweating over Ukraine’s rare earth potential, but the reality is that Beijing is indifferent. Unlike Western nations, China doesn’t need Ukraine’s rare earths. It already controls 36% of the world’s reserves and dominates the entire supply chain. Ukraine’s deposits, while substantial on paper, are not an immediate threat to China’s dominance. The current U.S.-China trade war over rare earths will continue with or without Ukraine’s involvement. And we must remember many of Ukraine’s deposits sit in Russian-held parts of the country, which are likely at this point under the Trump administration not to revert back to Ukraine.
So Ukraine Rare Earth Hype Meets Reality
Ukraine’s rare earths are not a short-term game-changer for the global supply chain. With deposits stuck in Russian-occupied areas, zero processing capability, no investor confidence, and unrealistic demands for security guarantees, Ukraine’s rare earth potential is little more than a long-term hypothetical. While the U.S. may want to diversify away from China, it frankly doesn’t need Ukraine to go in that direction. Of course, Rare Earth Exchanges suggests that America needs an industrial policy to drive change in this sphere. Is the American government aware of this requirement? We are not so sure.
As for China? It remains firmly in control, unfazed by the geopolitical chatter.
For now, Ukraine’s rare earths remain buried treasure—likely to stay that way for the foreseeable future.
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