London/Kopanky, Ukraine (Reuters) – Fields -covered fields in Central Ukraine, where some of the largest proven lithium deposits in the country are located, a small team of ecological consultants fall in holes in the earth to measure water levels.
The environmental research, contracted by the small Ukrainian mining company that has the license, Uklithiummining, occurs for years on mining activities on the undeveloped site.
It underlines how much work is still to be done before a highly praised minerals between Ukraine and the United States generates considerable income for both sides.
President Donald Trump sees the Minerals -deal – whom he is on Friday to President Volodymyr Zenskiy in Washington – while America's way of earning part of the money that it has given Ukraine in the form of financial aid and weapons to help the control of Russia, who came in three years ago.
For Denys Alyoshin, Chief Strategy Officer of Uklithiummining, the Washington agreement is a step in the right direction because the American involvement makes Ukraine less vulnerable in the longer term for Russian aggression, he said.
But without any form of Western security guarantee, developing the Polokhivske lithium deposit would be difficult, he said. The deposit – one of the largest in Europe – is just 240 km (149 miles) northwest of the front line with Russia.
“Before the war broke out, I had many commercial negotiations with … Investors interested in the project,” Alyoshin told Reuters. “But when the war started … a rational CEO would not go to a country where there is a war, they would go to Zimbabwe, Canada or Africa. There are many places to go where there is no war.”
Despite repeated requests from Zelenskiy, the Trump administration KYIV has not offered a security guarantee. This has done doubt about the commercial feasibility of developing deposits of rare mineral resources, used in high-tech devices and batteries, given the risks of a return to war, even if a cease-fire has been agreed with Russia this year.
A design of the mineral deal, assessed by Reuters, contained reassuring language but no guarantees for safety. Instead, it was aimed at creating a joint US-Ukraine managed “Reconstruction Investment Fund” to which KYIV will contribute 50% of the income of the future income of natural resources.
Moreover, the conditions of the deal are wide and further negotiations will be needed to determine details, four experts told Reuters.
Even if a permanent peace returns to Ukraine, Ukrlithiummining has to pick up $ 350 million and he needs for at least 1.5 years to conduct a feasibility study before it can start building a mine and enrichment factory, Alyoshin said.
“It means that we will be able to reach a steady phase production … it can be 2029.”
The following US presidential elections will take place in 2028, and Trump, the champion of Minerals cooperation as a means of guaranteeing peace, would be constitutionally excluded from running again, because they have already served one term.
Seven mining managers and industrial analysts, however, told Reuters that the timeline of Alyoshin is optimistic. Exploration periods are usually four years; A feasibility study would take another year before the construction of a processing factory could even start.
“The reality is that most lithium deposits in Ukraine have been identified in the Soviet era and that we have not had any real updates or exploration for many years,” said Federico Gay, analyst at Benchmark Mineral Intelligence, an in London-based specialist information proofer-proofer-proofer-proofer-proofer-proofer-proofer-proofer-proofer-proofer vehicles.
“Even if everything stacks, it would take at least eight years for the Polokhivske payment to be developed to the stage in which it produces usable lithium,” he said.
Moreover, the deposit is deep and may require up to $ 800 million to build the mine and the concentrator, Gay said, who adds that another $ 1 billion investment would be needed to produce the lithium compounds required for batteries.
Despite the challenges, Alyoshin said that his company was ultimately planning to produce approximately 1.5 million tonnes of raw ore per year and that to process up to 300,000 tonnes of petalite concentrate – a more lithium -rich substance.
With extra investments, Alyoshin added that the concentrate can be further refined to produce 22,000 tons of battery-quality lithium carbonate.
The details of planned production and processing time lines on the Polokhivske payment have not been reported before.
Classified reserves
The demand for the minerals is high. Lithium is used in batteries of electric vehicles, while rare earths are used in everything, from car turbines to wind turbines to advanced military weapon systems.
But changing Ukraine's reserves of lithium and rare earths in operational mines and building processing facilities is a huge company, according to more than 10 experts in the field of analysts and my industry.
Ukraine does not produce rare earths, but, according to the Ukrainian Institute for Geology, has great deposits of such minerals, including Lanthaan, Cerium, Neodymium and Yttrium. Detailed information about those reserves are classified.
Private investors can be wary of a deal in which the US received minerals in exchange for security guarantees, protection against future Russian attacks and help. The mining industry would normally royalty Deals use as a way to get financing of investors in exchange for a percentage of income from the turnover as soon as production starts.
Every Trump deal to gain access to the critical minerals of Ukraine, will not challenge the United States near the considerable benefit of China in those important minerals, while he is in power.
“Yes, it is a contrary to China, but you still have the problem of where the minerals will be processed and how long it will take,” said Julian Kettle, vice chairman Metals and mining at natural resources Consultancy Wood Mackenzie.
“Ukraine produces Titanium and it has extensive graphite and lithium deposits. You can expand the production to existing mines. But when the new border development comes, the discovery of material can take up to 10 years.”
China is already the world's third largest lithium producer, after Australia and Chile. It is also the world's top producer of rare earth elements, including neodymium that is used to make strong, light, powerful permanent magnets used in defense equipment.
US Geological Survey (USGS), a government agency, does not provide details about the production of lithium in the United States. Last year it estimated 45,000 tons of rare nature oxides in mineral concentrates – which would make the US the second largest concentrate producer after China.
But the gap is great. According to USGS last year, China mined 270,000 tons of rare earth elements or 69% of the worldwide total. And it has an even tighter stranglehold over the processing of rare earths – a complex and pollution process.
Many companies that rare earth minerals still have to send their concentrate to China to be processed, which means that Beijing produces more than 90% of the rare earth elements in the world.
More negotiation to do
Dominic Raab, head of Global Affairs at Appian Capital Advisory, a private equity company that invests in mining companies, said that he considered the deal between the US and Ukraine as a positive step forward to help fund the redevelopment of Ukrainine.
“There is much more due diligence and negotiations,” said Raab, who previously served as a former Deputy Prime Minister and Minister of Foreign Affairs for the United Kingdom.
Appian would be interested in investing in the minerals projects of Ukraine where more information about the geological potential of the country was, said Raab.
Ukraine has classified deposits of 22 out of 50 minerals as critical by the US government and has important deposits of lithium, graphite, titanium, uranium used to generate nuclear energy, in addition to rare earth elements, according to BMI.
“Ukraine has not been mapped in 30 years. There is so much more to do before we get a phase of advanced exploration in Ukraine,” said Gracelin Baskaran, director of the Critical Minerals Security Program in the Center for Strategic and International Studies, an American think tank.
But she said that mining – which consumes about a fifth of energy worldwide – required robust electricity infrastructure: “Ukraine is bombed. It is not really a competitor given the state of infrastructure and a huge risk risk.”
(Reporting by Pratima Desai in London and Olena Harmash in Kiev; Additional reporting by Thomas Peter in Kopanky and Ernest Scheyder in Houston; Edit by Veronica Brown, Mike Collett-White and Daniel Flynn)
