Risks or opportunities: How Ukrainian businesses react to Trump's statement on mineral resources

American President Donald Trump announced a deal to provide the United States with access to Ukraine's mineral resources in exchange for weapons.

"They have tremendously valuable land in terms of rare earth, in terms of oil and gas, and other things. I want to have our money secured because we are spending hundreds of billions of dollars," Trump said.

The "rare earth" elements Trump referred to are 17 specific elements (abbreviated as REE), such as scandium. Ukraine has these resources, but there are many nuances regarding quality, location, and the economics of extraction.

Trump likely had in mind not only Ukrainian REEs but also critical minerals used in modern manufacturing, such as titanium, lithium, beryllium, graphite, manganese, and even iron ore and coal.

LIGA.net, in collaboration with the Anti-Corruption Action Center, previously reported on who owns these and similar deposits. The issue of partner access to Ukraine's strategic minerals has been on the table for some time.

This opens up many opportunities for Ukraine. However, there is also a risk of becoming a resource appendage for partners. For example, it might be more advantageous for partners to export raw materials or semi-finished products to European factories rather than build a new plant from scratch in Ukraine.

We interviewed subsoil experts to determine the severity of this risk and, if so, what Ukraine can do to reduce it.

Andriy Brodsky, owner of Velta, a major private titanium company, says he currently sees only opportunities, not risks.

"Ukraine has transformed from an industrial state to an agrarian one, which is now a low-margin economy. Trump is talking about our new re-industrialization. Raw materials will be extracted in Ukraine and processed locally into semi-finished products. These will undoubtedly be exported because we lack the technologies to produce finished products. However, new enterprises will be created, leading to new taxes, jobs, technologies, and foreign exchange earnings for Ukraine. There is no benefit to the nation if our deposits lie untouched for millions of years. If Americans invest in our resources, they will protect their investments from unfriendly countries. When enterprises with American capital and strategic significance for U.S. raw material security are located in Ukraine, we will have better conditions for ending the war."

Ostap Kostyuk, head of the Zavallivskyi Graphite Mine, a Ukrainian graphite company with Australian investments, acknowledges the risk of Ukraine becoming a resource appendage but highlights the lack of domestic extraction and processing infrastructure. "This, in turn, leads to nothing - neither growth nor decline."

"Our company started operations in the 1930s and has survived two wars. Ukraine is rich in mineral resources, but the state policy on extraction, support, or stimulation of extractors is low or non-existent in many–but not all–sectors. Becoming a strategic partner with the United States in any form, with growth prospects for local businesses, is undoubtedly positive. Australia, for example, is the world's largest supplier of metallic ores but does not produce finished products with added value."

However, most of the roughly 30 experts interviewed on and off the record agreed that there are still risks. Some respondents say they are significant. We have systematized the most meaningful responses and present them below.

Dmytro Kashchuk, Head of the Subsoil Use Committee at the European Business Association

We have a chance to become a key player in the market for critical raw materials. But for this, we need not just to discuss changes but to create a clear and effective strategy today.

Without tax, financial, and regulatory incentives, the extraction, enrichment, and processing of raw materials will not be competitive. It is important to minimize barriers for investors, ensure transparent rules, and guarantee investment protection.

Effective tools include auctions and tenders with product-sharing agreements, which can attract foreign investors through transparent and understandable conditions. Public transparency of information about deposits significantly facilitates the decision-making process for investors. We have problems with this.

Developing interdepartmental coordination and aligning state and private initiatives in the strategic raw materials sector at the Cabinet of Ministers level is crucial. We do not have such coordination now.

Successful examples, such as Kazakhstan, show the importance of coordinating land use for extraction through national reserve mechanisms. This involves large-scale geological surveys, including drilling, satellite imagery analysis, and laboratory soil sample studies.

Land use should be coordinated with local communities to minimize conflicts. Two important points for Ukraine to adopt here are to create a national register of land plots suitable for mining, taking into account geological research, and to legislate a mechanism for compensating land owners and transferring this land for use.

It is also important to prohibit unjustified interference by law enforcement agencies in business activities.

[Ukraine] should allow the registration of industrial parks for mineral processing purposes, which is currently forbidden. Support the circular economy by investing in the recovery of raw materials from waste. For example, some countries give preference in public procurement to goods made from recycled materials.

Tax incentives, such as flexible taxation based on royalties, depending on the type and quality of minerals, also help to develop the industry. In particular, this may include differentiation of rates depending on the level of profitability, as is practiced in Canada. It is also possible to deduct geological exploration costs, including research and drilling, from the gross income of enterprises.

To stimulate investment in the processing of strategic raw materials, tax incentives and accelerated depreciation of equipment should be introduced for recycling companies, as is the case in Germany. In addition, companies can receive tax credits for capital investments, which reduces their tax liabilities by the amount of investments in infrastructure.

Financial incentives are important to support innovation in the industry. These include cheap long-term loans and government grants for recycling research. For example, the German government actively supports research in mineral processing, which allows for the introduction of the latest technologies to reduce dependence on imports.

Insuring investments against political and war risks will ensure stability and confidence for investors in extraction projects, particularly for strategic raw materials. Increasing funding for new technologies will support sustainable development and reduce environmental risks."

Yehor Perelyhin, former head of the State Titanium Enterprise United Mining and Chemical Company (UMCC) before the company was sold to NQSOL Holding (Azerbaijan) in 2024

Re-industrialization. Compensation for electricity costs. Removal of the "classified" stamp from information on stocks. Abolition of export controls.

We need to return to the creation of special economic zones and "technology parks". This is important for launching the extraction and processing of critical minerals. We should not be afraid of environmental problems. We need to move forward and, for example, use locations that already have a history of chemical processing.

We need to re-industrialize, build heavy production and processing in special locations again, and create our own competitive advantages.

To achieve this, we need to:

• Implement a program of partial compensation for electricity costs or introduce financial incentives tied to electricity within the framework of a "technology park" or special economic zone. With such electricity prices, we initially lose to other countries.
• We need to open up geological information about our reserves now. The "classified" stamp does not work and only harms the investment attractiveness of the industry.
• The same applies to export controls. Our American partners look at us with great surprise when they hear about export controls on ilmenite. Our government complicates exports with additional bureaucracy and regulations that are impossible to comply with. Or they require months of document preparation and constant business trips. If the country to which exports are made, for example, the United States, does not have a mirror approach to export controls on ilmenite and does not recognize this product as a dual-use commodity, it is very difficult in practice to exchange the necessary documents and obtain all the necessary excerpts and certificates. In such a case, it takes months to conclude and maintain an export contract. In most cases, the importer refuses to deal with the Ukrainian export control system because, for example, American operators do not understand how to implement it. And the exporter loses a buyer and falls out of the market or receives worse price offers. As a result, exports fall.
• We also need a mechanism for guaranteeing or insuring long-term offtake contracts (a contract signed for 3-10 years, sometimes more, in most cases with an advance part, is the best guarantee of selling products for a specific volume and time frame - ed.), so that local operators can sign up for long-term horizons, receive advance payments and have more stability in planning their cash flow.

Volodymyr Boiko, founder of the information agency Nadra.Info

Ukrainian subsoil needs the Ukrainian stock exchange and independent media.

The United Kingdom, China, the United States, Canada, Australia, and Japan are not associated with the concept of a "resource appendage." What they have in common are developed stock exchanges that help finance large-scale projects, including mining. Ukraine should finally relaunch its own stock market to create a new point of capital attraction to Ukrainian subsoil. It is important that the stock exchange (or even local exchanges for local extractive projects, why not?) be located in Ukraine – not in Warsaw, London, or New York.

Currently, there is no corporate market in Ukraine. That is why the state should encourage subsoil users to attract equity capital and projects in strategic and critical subsoil that require billions of dollars in investment will become a real driver of growth in all sectors of the Ukrainian economy.

Of course, without special joint efforts of the Cabinet of Ministers, the State Service of Geology and Subsoil, the National Securities and Stock Market Commission (NSSMC), legislators, and market participants, such a project will never be launched. But it is worth the extra effort. Thanks to the stock market, citizens will be able to directly exercise their right to ownership of Ukrainian subsoil guaranteed by the Constitution by purchasing shares in any mining and processing plant or metallurgical plant (and later a local quarry, glass or brick factory) at a market price on the stock exchange. This will be an effective tool to fulfill the president's promise of fair distribution of profits from subsoil among all Ukrainians.

Through the instruments of the securities market, Ukraine's critical and strategic subsoil will become a reliable foundation for such areas as medical, social and pension insurance, and for deposit guarantee. The second wind of the stock market through the corporatization of subsoil and the free sale of shares will make the extractive industry more transparent and attractive to investors, both venture capitalists and strategic ones, in the long run.

This will increase the capitalization of Ukrainian subsoil and our country as a whole. And it will allow financing the implementation of any projects in Ukraine, not only for mining but also for deep processing of minerals!

The quality work of domestic independent media will also prevent Ukraine from becoming a "resource appendage": Ukrainian journalists should closely follow the hands of all actors, disclose all the circumstances, conditions, benefits, and risks of using subsoil in new projects, their environmental impact, the amount of state compensation, and the fulfillment of mutual obligations between investors and communities.

After all, despite significant digital progress in recent years, the subsoil industry in Ukraine is still prone to "shadow decisions" in some places. And in the hands of officials who are not always motivated to protect the interests of the state, future agreements (PSAs or otherwise) can easily become a tool for enriching a few – without any clear benefit to the Ukrainian people, who bear the real burden of the war.

Alina Stryzhak, Anti-Corruption Action Center