Ukraine critical minerals: Miltech implications

BLUF: Ukraine has more than 20 types of minerals that are critical for Western defense production, including large deposits of graphite, titanium, and lithium. Not many companies have jumped into this risky industry, however. The true size of critical mineral reserves – estimated to be vast – is unknown and many barriers for investors need to be removed for a successful industry to feed raw materials to the defense sector.

Last week the world saw Donald Trump and Volodymyr Zelenskyy face off in the Oval Office, with talks breaking down before they could sign a minerals deal. 

Their ongoing disagreement — and potential openness to still signing the deal – has deep implications for the world's defense tech industry.

Minerals such as lithium, graphite, and uranium are key for producing electric vehicles and batteries.

Rare earth metals are also vital for much of the globe’s weaponry systems. Most modern planes, artillery, and even armor cannot be manufactured without the minerals – and neither can many drones and EW systems.

Developing the critical minerals mining industry in Ukraine may power its role in the Western supply chain and in the long-term protect its native production of vehicles, self-propelled howitzers, ammunition, and drones.

Critical minerals in defense

The defense industry and the world of critical minerals are inextricably linked. The industry relies on stable mining supply chains. Defense investors pay close attention to which minerals their products need and which countries may supply them, explained Perry Boyle, CEO of MITS Capital.

For example, niobium is a metal that is used in magnets for motors, especially in drone motors. As China is the dominant niobium supplier in the world, MITS Capital has often searched to find different suppliers of the mineral, in order not to be reliant on Beijing.

However, most defense investors cannot invest in minerals directly, or build their own mines to secure supply chains. 

"Mining is a different industry than defense production. It takes a long time to build a mine. And we are focused on today and getting things into the battlefield today," explained Boyle.

And in the near term, personnel, resources, and teams that build their products are much more important for investors than theoretical risks in raw material markets, said Oles Khudoba, co-founder of Double Tap Investments.

"There is a need to diversify markets to protect ourselves. Because the dependence on China is big. However, the raw material base and creating something from raw materials is more difficult. There is free access to resources and no shortage,” Khudoba said.

Many big Western defense manufacturers are engaged in metal production and processing, but not in mining. 

Northrop Grumman invested in titanium casting capabilities. In 2018, Boeing and Russian firm VSMPO-Avisma launched a titanium joint-venture company in Russia. It focused on titanium forgings for Boeing airplanes, but in 2022 this unit suspended all operations due to the Russian invasion. 

In 2012 Airbus invested 15 million Euros in African gold mining, but left the region business within two years, before it had started mining. 

And up until 2023, Lockheed Martin planned to mine metal ores. It explored cobalt nickel and other metals deposits on the British seabed but sold this business amid criticism from environmental activists.

Ukraine’s mineral deposits: A briefing

Ukraine accounts for about five percent of the world’s mineral reserves, according to the Ukrainian Geological Survey.

However, many of Ukraine’s most mineral-rich areas are now occupied by the Russians. 

According to a study from the Canadian geopolitical risk firm SecDev, Ukraine has a total mineral inventory of approximately  $14 trillion. However, 70 percent of those minerals are located in the Dnipropetrovsk region, close to the frontlines, and the currently-occupied territories of Luhansk and Donetsk. 

That still leaves rare minerals worth billions of dollars in Ukraine-controlled territory.

Yehor Perelygin, the former CEO of Ukrainian titanium giant UMCC-Titanium, said there is a lack of official data on the minerals in Ukraine. The majority of deposits were explored during Soviet times, he explained – Western companies use only Canadian and Australian metrics. 

"These standards take into account a wide range of parameters, characteristics, and risks related to the development of the deposit and the quality of the raw material. If there are no estimates according to one of them, the project looks like a pig in a poke,” Perelygin said. 

In addition, the information on most critical minerals, such as titanium, tantalum, and lithium, is classified by the government. The procedure for removing the ‘secret’ stamp requires a lengthy bureaucratic process, Perelygin explained. 

In addition, there is a lack of samples on many Ukrainian deposits. A sample, also known as a core, allows observers to estimate the characteristics of the raw material in the deposit. Yet, Ukraine has lost its samples throughout the years, requiring investors to invest additional money to sample the area. 

Lithium in defense products

Lithium is a key element in battery production. Lithium powers smartphones, electric vehicles, and drones like the RQ-11 Raven and the Switchblade 300/600. 

Ukraine has the most significant lithium deposits in Europe — one percent of all world deposits, or a third of Europe’s reserves, according to the former head of the Ukrainian Geological Survey, Roman Opimah. 

Two of the country’s four lithium ore deposits are under Russian occupation in the Donetsk and Zaporizhzhia regions. The remaining are located in the Kirovohrad region. 

Yet, despite the global demand for the mineral, Ukraine’s lithium reserves remain unexplored. Mykhailo Zhernov, a director at the Australian company European Lithium, told Forbes that not all of Ukraine’s lithium can be used for production as the ore is not as strong as the ones in Australia and Chile. 

The license monopoly for the Polokhivske deposit is currently held by UkrLithiumMining, a firm owned by Serhiy Tabalov, the son of former MP Oleskadr Tabalov. The company has invested about $20 million in geo-reconnaissance for the area. It is gathering an additional $700 million to fund the construction and production of a mining and processing plant.

Another company, European Lithium Ukraine, is seeking a license to operate in the Dobra deposit, located in the Kirovograd region – one of the most significant lithium ore deposits. The company plans to invest about one billion dollars in lithium mining in Ukraine in the next five years. 

How Graphite is used in defense

Ukraine currently has 20 percent of the world’s ore deposits of graphite, a mineral used for pencils, batteries for electric vehicles, and semiconductors. In aircraft construction, graphite is used in onboard electronics and aircraft power plants. 

The reason is its ability to withstand very high temperatures and stay resistant to corrosion. 

Using graphite increases the service life of aircraft and makes the aircraft lighter, which saves fuel consumption. Graphite is also a part of navigation and guidance systems for tanks. Synthetic graphite flakes in powder form are also used to block electromagnetic waves that may be detected by the enemy.

Ukraine’s graphite reserves can produce lithium-ion batteries to power about 20 million electric vehicles, claimed the former head of the Ukrainian Geological Survey, Roman Opimah. 

Australian Volt Resources controls one graphite deposit in the Kirovograd region after it bought 70 percent of the Ukrainian group Zavallivsky Graphite's shares in 2021. Yet, in December 2024, the company suspended the mining amid the high costs of electricity and logistics and the outdated infrastructure. 

Ukrainian businessman Gennadiy Butkevych owns two graphite deposits in the Kirovograd and Odesa regions through his BGV Group Management investment company.  

Turkish construction and engineering firm Onur Group is licensed to explore another field in the Khmelnytskyi region. The company plans to invest about $50 million in graphite ore mining. 

Titanium in Defense

Titanium has become key for the aerospace industry, essential in producing the F-22 jets and constituting about 39 percent of the structural jet weight (titanium is needed for engine, chassis, fuselage, and wing elements). 

Firms such as Boeing and Airbus rely on it for their production, especially for military aircraft. 

For example, the rotors of UH-60 Black Hawk helicopters have titanium cores. This makes rotors withstand a shot from a weapon with a caliber of up to 23mm. In addition, due to its resistance to high temperatures, it is used in producing weapons such as cruise and ballistic missiles and engines. 

Seven percent of the world’s titanium-containing minerals are located in Ukraine’s 28 deposits, including one of the most enormous titanium deposits in the world, the Stremyhorodske field in the Zhytomyr region. Yet, according to the Ukrainian Geological Survey, most Ukrainian titanium reserves are not being developed. 

Only four companies are exploring titanium in Ukraine:  

• UMCC-Titanium: It is the biggest miner, and it was privatized in 2024. It is owned by Cemin Ukraine, which is owned by Azerbaijani businessman Nasib Gasanov.

• Group DF: owned by Ukrainian oligarch Dmytro Firtash.

• Demurinsky Mining and Processing Plant: previously owned by Russian Oligarch Mikhail Sheknov. The Ukrainian state now controls it.

• Velta Group: owned by Ukrainian businessman Andriy Brodsky.

Uranium in defense

Uranium has become a crucial mineral for national security and energy. It is a key component in fueling nuclear energy and propelling future demand for energy driven by artificial intelligence, according to CSIS. Depleted uranium is also used in armor-piercing shells and armor for vehicles (like M1 Abrams tanks). It is also used as a weight to balance aircraft.

Kazakhstan is the biggest uranium miner, with 43 percent of the country's global reserves. Yet, Russia and China combined control 50 percent of the world’s uranium supply chain, according to the Centre for Strategic and International Studies, creating a threat to America. 

Ukraine, which has 2 percent of the world’s uranium reserves in its 21 deposits.

The state-owned Eastern Mining and Enrichment Plant (EMPP) is Ukraine’s only producer and supplier of natural uranium. Kosharna wrote that the company currently covers about a third of the country’s nuclear power industry's uranium needs. Yet, the government is preparing to give all uranium licenses to the EMPP and later invite strategic investors to develop the mining, Ukraine’s minister of energy, Herman Halushchenko, said.

Nickel, copper, cobalt in defense

Nickel, copper, and cobalt, which can often be found together in mineral deposits, have become essential for the production of batteries. Nickel has also been used for the creation of alloy steel and electronics. 

In particular nickel and cobalt are used to make high-performance superalloys for aircraft. Combined with a samarium, cobalt creates a material used in jets to combat radar detection.

Copper is employed for parts of aviation, space equipment, cable, and wires. Copper is also important for ammunition production. It is a driving band in artillery shells and a liner in shaped-charge anti-tank munitions.

Ukraine has 12 silicate-nickel deposits with reserves that contain 215,000 tons of nickel and 9,000 tons of cobalt. There is currently not enough data to determine the amounts of copper. 

Mine Extraction and ColorMet Ukraine currently have licenses until 2032 and 2034 to explore prospective cobalt deposits in the Kirovohrad and Zhytomyr regions. Yet, up to the moment, the three minerals have not been explored. 

What’s next?

Amid Russia’s full-scale invasion, the government set restrictions that require Ukrainian companies to request export permissions before sending minerals abroad. Andriy Brodsky, the owner of Ukrainian titanium producer Velta, said it is to prevent resources from landing in Russia, which used to be one of the top importers of Ukraine’s titanium. 

Notably, many democratic countries are looking to decouple from the Chinese supply chain of critical minerals. America currently imports much of its resources from China, which has been leading the market in the global processing of rare earth minerals. 

Currently, China is the world’s largest producer of titanium and holds two-thirds of the global lithium chemical output. If desired, China could cut off 40 to 50 percent of the global rare earth supply, according to the American think tank Rand. 

Kyiv has a maximum of two years to launch these projects before it's too late for the country to enter the markets as an alternative and a part of the Western supply chains, said the former CEO of Ukrainian UMCC-Titanium Yehor Perelygin. 

President Zelenskyy first proposed a joint development of Ukraine’s mineral deposits with Western allies in October 2024 as part of his five-point victory plan. Since Trump took power in January 2025, he has portrayed the deal as a repayment for the billions of dollars in aid sent to Ukraine since Russia’s invasion. 

Tony Sage, the Executive Chair of Australian European Lithium, said one serious obstacle is the constant threat of Russia’s invasion. 

"Nobody wants to spend money in Ukraine. We say that we are starting to build a factory. One day, Russia will destroy it. Nobody wants to take that risk,"  Sage said.

Access to Ukrainian critical minerals may strengthen American defense technologies, missile and electric vehicle production, and decrease the dependence on China. But to reach this US businesses will also need to build the infrastructure for Ukrainian ore transporting and processing.

"It’s possible it will be years before any American investor gets any return on their money due to a chronic lack of investment in Ukraine’s minerals sector for almost a decade. So even if Trump’s deal goes ahead, he will have to wait a while before Ukraine’s minerals will fulfil the US’s needs", added Dafydd Townley, International Security researcher at the University of Portsmouth.

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