INTRODUCTION
Many democracies have invested in renewable energy and sustainable infrastructure, becoming dependent on China for raw materials and components used in their manufacturing processes. This dependency poses risks and challenges, leading to discussions of creating a new coalition of allies to source minerals for clean energy technologies and reduce reliance on dictatorships. Ukraine’s significant deposits of natural resources, including coal, natural gas, iron ore, titanium, lithium, and rare earth minerals, make its victory important not only for security but also for gaining access to resources that can be obtained from a democratic, European country, enabling a shift away from relying on China and russia for energy resources. Ukraine has the potential to become a significant supplier of lithium with reserves estimated at 500 thousand tons, making it one of the world’s largest. Despite having no deposits currently under development, global attention has been drawn to them, with some companies expressing interest. As demand for lithium is expected to skyrocket with the rise of electric vehicles, Ukraine has good prospects to become a significant player in the lithium market.
Moreover, Ukraine has been a major producer of neon gas, providing 90% of the highly purified, semiconductor-grade neon used by the US chip industry. However, the russian offensive operations along the Black Sea forced two of the three sizeable Ukrainian air separation companies to close their operations for some time and posed threats to Ukraine’s prospects in neon gas exports. But they have already resumed operations and exports.
In addition to it, Ukraine has significant titanium ore reserves, accounting for 1% of the world’s total reserves. However, most of these reserves remain undiscovered, and the country’s titanium industry has been affected by the war. Despite this, Ukraine’s titanium assets remain attractive to investors, and there is potential for the country to become a game changer in the global titanium market. The US is already interested in helping Ukraine develop this industry to reduce its reliance on China and russia as potential alternative sources of the metal.
To sum it up, Ukraine with its significant reserves of lithium, titanium, and neon gas, makes its victory important for security and energy resource diversification. These resources should help developed nations decouple from authoritarian regimes.
Nowadays, developed countries focus their efforts on the development of post-industrial economies, with the main sectors being information technology, biotechnology, renewable energy, medical technology, and others. However, for their development, these industries require various resources including minerals, neon gas, lithium, and others. Currently, there is competition in the global market for access to these resources, especially from the U.S., which can affect the economic stability of countries.
It is also worth mentioning the European Green Deal, which involves a transition to a green economy with a reduced impact on the environment. American President Joe Biden has also presented a plan to build a more resilient, sustainable economy in the U.S. to reach net-zero emissions by 2050, invest in clean energy technologies, create millions of good-paying jobs in clean energy industries, and improve energy efficiency in buildings.
To achieve a successful transition to green economies with a low level of emissions, such critical minerals as lithium, cobalt, nickel, and rare earth elements are needed in clean energy technologies, for example, electric vehicles, wind turbines, and solar panels to name a few. That is why the democratic world has demonstrated the growing demand for these minerals and the need to ensure a sustainable supply to support the global transition to clean energy in recent years. It includes the shift towards electric vehicles, and an increasing number of countries now want to diversify sources of critical minerals. They are investing in the recycling and reuse of technologies, improving supply chain resilience, and increasing international cooperation to ensure a sustainable and secure supply of critical minerals.
For example, the U.S. and the EU want to create a transatlantic alliance to secure the supply of critical minerals needed to produce electric vehicle batteries. The alliance aims to create a buyers’ club to coordinate demand and increase their bargaining power to negotiate better prices and sustainable supply chains for these minerals. In such a way, they can reduce their dependence on Asian countries, particularly China, ensure national economic security, and reduce risks. As regards the current figures on the dependence on minerals, it can be noted that the United States (78%), Japan (73%), South Korea (58,9%), Germany (~66%), and other countries of the EU depend significantly on the rare earth elements from China.
In view of this, Ukraine becomes very attractive for countries who declared the shift to green economies and want to diversify their supply chains outside of China due to geopolitical risks, as it has significant reserves of rare earth elements that will be described in the next sections of this paper. Moreover, Ukraine’s efforts to deepen its partnerships with the West and capitalize on emerging opportunities also contribute to its appeal as a potential rare earth supplier Lithium.
LITHIUM
Lithium has a wide variety of uses and has been used for industrial purposes for a long period. One of lithium’s most well-known end uses is lithium-ion batteries for portable electronics and electronic vehicles. Lithium-ion batteries are also the single-largest end-use of lithium, amounting to a 74% share of global lithium consumption in 2021.
Figure 1. Top-8 lithium-producing countries
Source: IG
Chile has the largest lithium reserves worldwide by a large margin. Australia comes in second, with reserves estimated at 6.2 million metric tons in 2022, and this country was the top country in terms of lithium mine production in 2022, with an output of 61 thousand metric tons of lithium that year. Also, a lot of lithium reserves are concentrated in Argentina, China, the U.S., Canada, Zimbabwe, Brazil, and Portugal. In terms of import, as of 2020, the main importers of lithium are South Korea, China, Japan, the U.S., Belgium, russia, and other European countries.
The price of lithium has increased significantly in 2022 (from 18,9 till 72,4 thousand U.S. dollars per metric ton), and the reason for the colossal rise is rooted in the transportation segment’s shifts toward electrification. But some experts disagree on the outlook for lithium prices. For example, Head of Chinese lithium producer Sinomine Resource Group Co. Wang Pingwei also expects lithium prices to decline in 2023 due to an increased supply of the metal.
Figure 2. Average lithium carbonate price
Source: Investing.com,, 2017 — 2nd half, 2023 — Jan-Feb
It is anticipated that demand for lithium will double by 2030, surpassing two million tons. Electric vehicle batteries are expected to be the main driver of growth in this market, and in China, lithium-ion batteries will continue to account for half of the global demand for lithium-ion batteries.
Figure 3. Projection of global lithium demand
Source: Statista
Ukraine could also become the key supplier of lithium to the global market, as a large quantity of lithium oxide (500 thousand tons) might be found from the northern border with Belarus to the shores of the Azov Sea in the south of Donbas. The Ukrainian lithium reserves would be among the world’s largest if that preliminary assessment proves accurate.
However, despite rich deposits and favorable natural and geographical position that give Ukraine every chance to become a European leader as a supplier of rare earth elements, not a single lithium deposit is now under development.
Despite that, Ukrainian lithium was still attracting global attention, and it was especially noticed in November of 2021, when the Australian company, European Lithium, reported that it was nearing an agreement to acquire the lithium deposits in the region of Donetsk (western Ukraine) and Kirovograd, in the center of the country. Chengxin Lithium also requested the rights to some deposits in the same month, which would make China the first country to place a deposit in Europe.
Figure 4. Lithium deposits in Ukraine
Source: Renewable Matter
So, we may expect that even after the end of the russian-Ukrainian war, the interest won`t fade, but, on the contrary, will increase, especially from Australia, as Serbia revoked lithium exploration licenses from the Anglo-Australian mining giant. But there are still some threats from the African continent; however, planned projects may be hampered by poor transport infrastructure in some of its regions.
In general, batteries now rely heavily on this metal, and with the rise of electric vehicles, demand is expected to skyrocket, leaving automakers scrambling to secure adequate supplies, and Ukraine could become one of those who will satisfy some part of this demand.
NEON
Ukraine produces around 70% of global neon gas exports and supplies 90% of the highly purified, semiconductor-grade neon for chip production used by the U.S. industry. Two of the three large Ukrainian air separation companies (Cryoin and Ingas) have closed their operations due to russian offensive operations along the Black Sea coast. Reuters calculations, based on figures from two Ukrainian companies and a market research firm, found that 45% to 54% of semiconductor-grade neon in the world comes from Ingas and Cryoin. As a result, a significant portion of world noble gas exports have been halted.
It was estimated that Ingas (based in Mariupol) manufactured 15-20 thousand cubic meters of neon per month for Taiwan, Korea, China, United States, and Germany before the invasion, with about 75% going to the chip industry, according to the statement of Mykolay Avdzhy, the company’s chief commercial officer. Unfortunately, russian invaders illegally seized the facilities of this enterprise in Mariupol, and later it was announced that russists planned to resume the production of neon. The Odesa-based Cryoin, which has produced 10-15 thousand cubic meters of neon each month, halted operations on Feb. 24 as part of a safety measure to protect employees.
Despite the russian full-scale invasion of Ukraine in February 2022, there is currently an adequate supply of neon from China for many East Asian chipmakers, such as Renesas, Samsung, SK Hynix, and Rohm, meaning that they are not affected by a shortage of neon from Ukraine.
When russia occupied the Crimea peninsula in 2014, the supply of neon dwindled, and prices shot up 10 times their previous levels. Also, at that time, it was reported that some companies started reducing their neon consumption. When the occupation of Crimea occurred, several steps were taken to increase gas stocks at two points in the supply chain, so that gas suppliers and semiconductor makers would have three to 12 months of supplies on hand.
Apart from Ukraine, neon gas is also produced in China, but due to the shortage of supply prices grew steadily. Also, the russian-Ukrainian war led to opportunities for manufacturers based in other countries to increase the production of neon gas, and it poses threats to Ukrainian prospects in terms of neon gas export. At the same time, there were some official and non-official statements from the main producers of neon in Ukraine about the resumed operations of neon production and its export.. Considering this information, we may expect that the resumed deliveries of this gas in quite a short time after the beginning of the full-scale invasion to our primary importers had not had a significant impact on their customers.
TITANIUM AND RARE EARTH METALS
Ukrainian legislation prohibits disclosures of information regarding titanium ore reserves, but the US State Geological Survey estimates the amount of them at 8.4 million tons – it is 1,12% of world reserves. As of 2021, Ukraine is in 10th place among countries with the largest reserves of titanium minerals worldwide, while China has the largest reserves of this metal, particularly ilmenite (230 million metric tons).
Figure 5. Reserves of titanium minerals worldwide in 2021, by country, in 1 thousand metric tons of titanium dioxide content
Source: Statista15
Even though Ukraine has a great number of titanium minerals, most of them are not yet discovered, and the export leading countries are China, Germany, France, Japan, and India. At the same time, the dominant importers of titanium oxides are Germany, the U.S., Brazil, Vietnam, and Spain.
Figures 6-7. TOP10 of titanium exporting and importing nations
Source: ITC TradeMap
For quite a long-time price of titanium per kg was fluctuating in the range of 4-5 USD, but at the end of 2020, it increased to 7,5 USD per kg, because of the collapse in aerospace manufacturing, titanium turnings, and solids were in short supply, which had resulted in elevated prices throughout the titanium industry.
In 2021, the demand for titanium and its derivates was rising due to the rebound of the chemical and aerospace industries. Then, in one day (from March 15 till March 16, 2022), the titanium price per kg soared from 7,5 USD to 13,7, and it peaked in May 2022 at 19,25 USD per kg. The reason for such a jump in the price of titanium was a low inventory level, which led to robust demand from downstream industries. Moreover, the considerable role in the titanium price hike played by the rising demand combined with soaring fuel and energy prices. Then, titanium prices began to stabilize due to an increase in global recession speculations, muted demand, and cautious buying.
Figure 8. Titanium price, USD per kg
Source: TradingEconomics
It is anticipated that the titanium market will rise at a significant rate between 2023 and 2028, and it is projected that the price of titanium will continue growing. As Ukraine has considerable deposits of titanium — UMCC reported instead that our country has about 20% of the world’s titanium ores, so it is important to move in this directiont15.
According to the EY report, 78 deposits of different levels of study were found in Ukraine. However, titanium deposit bases in Ukraine are comprised of approximately 40 deposits, among them 1 unique, 13 large, and 10 medium deposits. There are currently only a few placer deposits where titanium ores can be found in Ukraine, which account for about 10 percent of all the deposits that have been explored.
Titanium ores in Ukraine are mined by four enterprises: UMCC, Mizhrichensky Mining, Valky-Ilmenit LLC, and Velta, while the main producers in the titanium market of Ukraine are Zaporizhzhia Titanium-Magnesium Plant (ZTMK; which produces titanium sponge); Sumikhimprom (produces titanium dioxide); and Velta (stopped the construction of a titanium plant in Novomoskovsk, Dnipropetrovsk regions and worked on the relocation of its facilities to a safer place)14.
The war had a significant impact on the titanium industry. First, two titanium ore sites were seized by russists. Second, the market estimates that production has decreased significantly. It is estimated that the titanium mining firms of Group DF mined 1,07 million cubic meters of ilmenite ore in the first half of 2022 (-25% compared to 2021), and produced 62 thousand tons of ilmenite concentrate (-5%) in the same period. UMCC reduced its production but has found ways to export titanium ores (shipment from Poland and Romania ports).
According to the UMCC, Ukrainian products can replace russian products that have fallen out of favor because of US investments in developing our titanium industry. Even some positive steps during 2022 have been made. For example, a direct agreement has already been concluded between UMCC and The Chemours, a US company, for the supply of 80,000 tons of ilmenite concentrate. As a result, a license was then issued to Velta in the summer of 2022 for the export of ilmenite concentrates to the USA.
The reason for the U.S. interest in helping Ukrainian titanium-producing companies is not just assistance; they are interested in our reserves of it as a potential alternative to the Chinese ones, because it will help the U.S. in its simmering conflict with China, and russian sources, as the Airbus, at the end of 2022, stated that they are going to decouple from russian titanium, and “it is a matter of months not years.”
Ukrainian titanium industry development was postponed due to the war. Despite the hostilities, Ukrainian titanium assets remain attractive to investors and, considering substantial deposits of this metal, Ukraine could replace russian titanium that was supplied to aircraft and defense manufacturers across Europe and the US. Moreover, given that there are only five countries in the world that actively produce titanium sponge, Ukraine is one of them and can become a game changer for the supply of the finished metal by cutting the reliance of our partners on russia and China.
CONCLUSIONS
The democratic world has ambitions and strong plans to develop post-industrial and green economies. As a result, many countries have made significant efforts to promote these strategies through investments in renewable energy, sustainable infrastructure, and policies to encourage innovation and entrepreneurship.
While conducting this shift to address pressing environmental and economic challenges, the countries have become significantly dependent on China due to its position as a major producer and exporter of raw materials and components used in the manufacturing processes of other countries. This dependency provides economic benefits, but it also poses risks and challenges in terms of supply chain disruption, trade relations, and geopolitical tensions.
In recent years, democracies, especially the U.S., Germany, Japan, etc., have started discussions on creating a new coalition of allies that can work together to source minerals for clean energy technologies, to reduce reliance on China. For example, more than half of Japanese manufacturers plan to decrease their reliance on Chinese suppliers due to rising U.S.-China tensions. Also, German officials and business leaders are exploring Vietnam and Singapore to diversify commercial ties in Southeast Asia and decrease their reliance on China, as concerns about potential risks in trading with China have arisen after russia invaded Ukraine and China’s more aggressive stance towards Taiwan.
Here comes Ukraine with its significant deposit of natural resources, not only coal, natural gas, and iron ore, but also titanium, lithium, and rare earth minerals. That is why Ukraine’s victory is important not only from a security perspective but also for gaining access to resources that can be obtained from a democratic, European country. In such a way, democracies would be able to move away, in terms of energy resources, such as oil, gas, and uranium, from dictatorships, such as China and russia.