Trump has been fixated on snapping up minerals. He doesn’t just want Ukraine’s resources, which include lithium, titanium and uranium. He’s also interested in getting access to Russia’s geographical wealth, including so-called rare earth elements like neodymium and promethium. (He appears to mistakenly believe that Ukraine has big stores of rare earth minerals as well.)
“I’d like to buy minerals on Russian land too if we can,” Trump said on Tuesday. “They have very good rare earth.”
But is Trump overestimating the importance of these minerals? Rare earth metals have been touted as critical to producing components like magnets and batteries for high-tech applications. And geopolitical hawks worry that China is by far the world’s biggest supplier of materials like yttrium.
But Bloomberg Opinion’s Javier Blas argues that they aren’t as essential as is commonly perceived (a myth that he says was spread in part by Ukraine last year):
At best, the value of all the world’s rare-earth production rounds to $15 billion 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.
Say that Ukraine was able, as if by magic, to produce 20% of the world’s rare earths. That would equal to about $3 billion annually. To reach the $500 billion mooted by Trump, the US would need to secure 150-plus years of Ukrainian output.
I quoted from a piece in the Telegraph a while back comparing the Trump mineral deal to the treaty of Versailles, and it contained this, which I didn’t focus on in the piece:
Talk of Ukraine’s resource wealth has become surreal. A figure of $26 trillion is being cast around for combined mineral reserves and hydrocarbons reserves. The sums are make-believe.
Ukraine probably has the largest lithium basin in Europe. But lithium prices have crashed by 88pc since the bubble burst in 2022. Large reserves are being discovered all over the world. The McDermitt Caldera in Nevada is thought to be the biggest lithium deposit on the planet with 40m metric tonnes, alone enough to catapult the US ahead of China.
The Thacker Pass project will be operational by next year. The value of lithium is in the processing and the downstream industries. Unprocessed rock deposits sitting in Ukraine are all but useless to the US.
The lithium bubble has long since burst. Shanghai lithium carbonate price per tonne:
It is a similar story for rare earths. They are not rare. Mining companies in the US abandoned the business in the 1990s because profit margins were then too low. The US government was asleep at the wheel and let this happen, waking up to discover that China has acquired a strategic stranglehold over supplies of critical elements needed for hi-tech and advanced weapons. That problem is being resolved.
Ukraine has cobalt but most EV batteries now use lithium ferrous phosphate and no longer need cobalt. Furthermore, sodium-ion and sulphur-based batteries will limit the future demand growth for lithium. So will recycling. One could go on. The mineral scarcity story is wildly exaggerated.
Recall that Zelensky himself offered up a mineral deal last September as a way to get American buy-in to support the cause over the long term. Lindsey Graham persuaded Trump that it was an amazing deal for America. The Ukrainians wanted a security guarantee for the deal and it doesn’t appear they are going to get it. But on the other hand, they may have played the greatest dealmaker on earth about the minerals in the first place.
Trump will claim that he just made a thousand trillion dollar deal that will make America rich and end the war and bring peace on earth or whatever. But in reality, it looks like it’s much less than meets the eye.
If it guaranteed continued support for Ukraine, it would definitely be worth it. But as it stands it’s just another fluff job to make Dear Leader feel like a winner. But since Trump’s almost completely drive by a seething desire for revenge against people he believes have wronged him (and Zelensky is one of them) maybe it makes sense for Zelensky to pretend like he’s been forced to grovel and capitulate to Trumps demands in order to at least keep him from making things worse.