ES #125: The Strategic Relevance of Ukrainian Minerals

Energy Shots #125:

The Trump administration opened talks to end the Russia-Ukraine war earlier this month and included an initial proposal for a $500 billion ‘mineral fund’ that would grant the U.S. a share of Ukrainian mineral revenues in exchange for accrued wartime aid over the three-year conflict.

• While Ukraine rejected President Trump’s opening demands, Treasury Secretary Scott Bessent and special envoy Steve Witkoff independently told interviewers on Sunday that the administration expects a deal to close after the next week of negotiations.

With details still emerging, today’s Energy Shots takes a look at Ukrainian mineral resources and their distribution in Ukrainian- and Russian-controlled territories to identify their strategic relevance for the United States and Western allies.

Pre-2022 Strategic Relevance of Ukrainian Minerals

Prior to Russia’s invasion in February 2022, Ukraine held:

• Europe’s largest uranium deposits (107k metric tons, 2% of global reserves)

• Europe’s third-largest proved gas reserves (39 trillion cubic feet)

• The world’s sixth-largest hard coal reserves (32 billion metric tons)

• Approximately 5% of global rare earth elements (2.6 billion metric tons, high uncertainty)

• Europe’s largest lithium deposits (estimated 500k metric tons, ~3% of world total)

• Top 10-largest natural graphite deposits (3.8% of global natural graphite reserves)

• 90% of the United States’ semiconductor-grade neon supplies

Ukraine mineral production global rankings in 2020:

• 3rd-largest producer of rutile [titanium dioxide] (15.7% of world output)

• 5th-largest producer of titanium sponge (2.2%), gallium, and bromine (1.3%)

• 6th-largest producer of ilmenite [titanium-iron oxide](5.8%), iron ore (3.2%), and graphite (1.7%)

• 7th-ranked producer of kaolin (3.6%), manganese ore (3.1%), and magnesium metal (0.6%)

• 8th-largest producer of pig iron (1.5%)

• 10th largest producer of alumina (1.3%)

Oil and Gas Production

Ukraine’s oil and gas deposits are relatively immaterial for the United States and Western allies. While Ukraine’s 39 tcf of proven gas reserves are the third-largest in Europe and could offset risks from the continent’s increasingly concentrated natural gas supply chain, Ukrainian gas reserves rank 23rd globally behind India and Indonesia.

Ukrainian gas production (1.7 Bcf/d) ranks third in Europe behind Norway (11.3 Bcf/d) and the United Kingdom (3.3 Bcf/d) but 32nd globally behind Israel, Brazil, and Bangladesh. For context, Ukrainian gas output represents less than 3% of Russia’s 57 Bcf/d.

Ukrainian Uranium Reserves

Before 2022, Ukraine controlled uranium deposits of approximately 107k metric tons — 2% of reasonably assured global uranium deposits and the largest deposits in the European continent.

• Efforts to diversify nuclear fuel supply chains away from Russia makes Ukraine’s deposits a strategically significant uranium source for Europe and the United States, particularly over the next decade of electricity demand growth that will require abundant reliable baseload generation.

Post-Soviet Union Ukrainian uranium production ranks thirteenth globally for aggregate historical output between 1945-2022. Ukraine is the world’s 10th-largest Uranium producer in the modern era.

Territorial Concessions Add Significant Uncertainty in 2025

Two points add significant uncertainty to the potential resource value of a US-Ukraine mineral deal:

1. While data on Ukraine’s oil, gas, coal, and uranium deposits are readily available, the countries claimed rare earth and lithium deposits are unsubstantiated. Ukrainian-reported lithium and other rare earth reserves are a) not supported by geological surveys or b) hidden for ‘national security’ purposes.

2. Russia has already captured the vast majority of Ukraine’s mineral-rich Eastern/Southeastern territory.

As shown below, three oblasts hold the majority of Ukraine’s mineral wealth. The Luhansk, Donets’k, and Dnipropetrovs’k oblasts account for over 80% of known oil, gas, and coal production and reserves. The lion’s share of Ukrainian critical minerals are held in the area inside of and surrounding the Donbas region in the southeastern corner of the country.

As of this week, however, Russia has captured the bulk of Ukraine’s most mineral-rich territory. How the US-Russia-Ukraine negotiations affect captured territory remains unclear, though Russia is unlikely to abruptly relinquish the long-term strategic value of the minerals and Black Sea access granted by these regions.

Looking Ahead

Cementing a U.S. stake in the region welcomes knock-on effects for global commodity markets that likely outweigh the direct value of mineral revenues by an order of magnitude. Geopolitical stability, influence over pipeline infrastructure, and security of global trade flows are examples.

Please reach out to the Mobius team to discuss potential downstream scenarios for domestic stakeholders with portfolio-specific context.

See you next Sunday.

ES.

This commentary contains our views and opinions and is based on information from sources we believe are reliable. This commentary is for informational purposes, should not be considered investment advice, and is not intended as an offer or solicitation concerning the purchase and sale of commodity interests or to serve as the basis for one to decide to execute derivatives or other transactions. This commentary is intended for Mobius clients only and is not considered promotional material.