By: Creamer media

The country has deposits of 22 of 34 minerals deemed as critical by the European Union for industries such as defence, high-tech appliances and green energy, as well as ferro alloy, precious and non-ferrous metals used in construction, and some rare earth elements.

However, much of the sector is underdeveloped, weighed down by Soviet-era bureaucracy and lack of investment.

After months of fraught negotiations, Kyiv and the United States agreed a minerals deal in April that was heavily promoted by US President Donald Trump. It created a fund, which became active on May 23, that will receive money from new mining licences in Ukraine and invest in minerals projects.

Ecology Minister Svitlana Hrynchuk told Reuters in an interview that Ukraine hoped the fund would significantly increase the mineral industry's potential, noting extraction was a capital-intensive and long-term task.

"Currently, our natural resources sector's share of gross domestic product is 4%, but the potential is much greater," she said late on Monday, without giving projections.

 "We really hope the agreement will draw more attention to this sector and make foreign investment more understandable and more attractive."

With the conflict still ongoing, about half of the country's mineral wealth and a fifth of its territory are now under Russian occupation. Ukraine has lost most of its coal deposits, as well as some lithium and manganese deposits and other minerals. 

Hrynchuk estimated that the sector had suffered losses of about 70-trillion hryvnias ($1.7-trillion) due to the occupation of Ukrainian territory and combat action along a more than 1 000 km frontline. 

Ukraine updated its strategy for its resources sector at the end of last year and was now focusing on improving access to information and data on geological exploration, reducing bureaucracy and finalising the lists of critical and strategic minerals crucial for the economy, she said.

The work is also part of Ukraine's push to move closer to the European Union, which Kyiv hopes to join in 2030.

UNDERDEVELOPED AND UNEXPLORED

Hrynchuk said the government was working with the European Commission and the European Bank for Reconstruction and Development on a multi-year project to digitise up to 80% of Soviet-era geological data. That task is about 40% complete, she said.

The government was also working to review an existing 3 000 mining licenses. Hrynchuk estimated that about 10% of them could be dormant.

"We are not interested in taking away assets if there is a potential for them to work," she said.

"We are interested for those assets which are... valuable for the state and have not been working for 10 years or more, to make appropriate managerial decisions about them. And to launch them back into circulation."

The licence review will be done this year and next, she said.

Despite wartime challenges, the government continued to auction mining licenses and last year raised 2.4-billion hryvnias from auctioning 120 mining licenses. It hopes to get a similar amount into the state coffers this year and has already awarded 32 licenses, with the majority for building sector materials, including clay, sand, marble, granite, but also amber.

Investors, who at present are predominantly domestic, were mostly interested in licenses for oil and gas exploration, as well as minerals such as titanium, graphite and manganese, she said.

The US minerals deal was agreed despite a clash between President Volodymyr Zelenskiy and Trump during their meeting in the White House in February.

Final documents to enable the joint investment fund to operate were exchanged last week, but projects will take time to materialise, Ukrainian officials said.

The minerals deal, which US Treasury Secretary Scott Bessent termed as a full economic partnership, hands the United States preferential access to new Ukrainian minerals accords and will help to fund Ukraine's reconstruction.