Case study — Finance · 11 min read · 5 questions
Why Ukraine's minerals are Iraq's oil all over again
The thesis
America has signed this deal twice before and lost both times to the same competitor. A 2010 Pentagon memo valued Afghanistan's minerals at nearly $1 trillion; the Mes Aynak copper concession went to a Chinese state conglomerate for $3.4 billion over American, Canadian and European bidders. In Iraq, after two American wars, Chinese companies hold four times the American share of licensed oil and gas. Washington supplies the security; Beijing signs the contract afterwards.
The difference between the war that worked and the ones that did not is what they were for. The Gulf War had a commodity as its objective and a 42-country coalition finished in six months. After 9/11 the goal shifted to terrorism and democracy, which has no completion condition, and America spent twenty years in two countries whose assets it never acquired. The $500 billion clause in the Ukrainian deal is lawmakers insisting on getting something back this time.
And Ukraine is a weaker version of the same bet. The $15 trillion counts deposits rather than reserves, rests on Soviet surveys nobody has repeated, and about 40% sits under Russian occupation or landmines. A mine opened in the 2020s took an average of 17.9 years from discovery to production. Even if every ton were real and reachable, the minerals are the wrong ones — America's exposure to China is rare earths, gallium and yttrium; Ukraine has titanium and manganese.
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The statistics
By the numbers — swipe or use arrows
Figures from USGS Mineral Commodity Summaries, World Bank national accounts, Transparency International's Corruption Perceptions Index, S&P Global mine development data, World Economic Forum investment figures, and the published terms of the proposed US–Ukraine minerals agreement
Key takeaways
America valued this exact prize once before. In 2010 an internal Pentagon memo put Afghanistan's untapped minerals at nearly $1 trillion and suggested the country could become the Saudi Arabia of lithium — the same framing, fifteen years earlier.
It went to China. China Metallurgical Group bid $3.4 billion for the Mes Aynak copper deposit, beating rivals from Canada, Europe, Russia, the United States and Kazakhstan, and planned to extract 11 million tons of copper, a third of all known Chinese reserves, over 25 years.
The reason America lost it is the reason it will lose Ukraine's. The United States was spending hundreds of billions fighting the Taliban and Al Qaeda while China was buying the raw material — the superpower focused on security, the competitor on commerce.
Iraq is the same story with a longer receipt. Chinese companies hold 7.27% of shares in licensed Iraqi oil and gas projects against 1.82% for American companies, import 1.18 million barrels a day, about 35% of Iraqi production, and were awarded 10 of the 13 projects in one recent licensing round.
The Gulf War worked because the objective was a commodity, not a government. A 42-country coalition liberated Kuwait in six months, restored the oil flow and left — with the Middle East producing over a third of world oil and holding nearly half of proven reserves.
The turn came in 2001. After 9/11 the mission shifted from oil and economics to terrorism and democracy, and Afghanistan is landlocked with an economy of agriculture and opium — a country with no mining expertise beyond coal that was still importing its electricity.
The headline number is a deposit estimate, not a reserve estimate. Ukraine claims a third of Europe's lithium at 500,000 tons of deposits — but a deposit is rock containing a mineral and a reserve is rock you can extract at a profit, and only a subset of any deposit ever becomes the latter.
The geology behind the claim is sixty years old. There have been no further surveys since the 1960s and 1980s, so the diversity, quantity and grade underpinning a $15 trillion valuation rest on Soviet-era fieldwork that has never been repeated.
Roughly 40% of the deposits counted in that estimate sit in eastern Ukraine, on land currently occupied by Russia or seeded with landmines — which is to say the most valuable part of the claim is the part nobody can reach.
Mining is slower than the deal assumes by an order of magnitude. Mines opened in 2020–2023 took an average of 17.9 years from discovery to production, up from 12.7 years for those opened in 2005–2009 — and the increase is in exploration and permitting, not construction, which has actually got faster.
The minerals Ukraine has are not the minerals America lacks. US import reliance is near-total in rare earths and bismuth at 95%, titanium and antimony at 83% — but it is only 12% reliant on beryllium, of which 60% of the world's supply is already in the United States.
China's grip is on a specific and different list. It supplies 94% of America's yttrium, 70% of its rare earths, 67% of its bismuth and holds 97% of global gallium production, 89% of magnesium, 84% of tungsten and 78% of graphite. Ukraine is not a meaningful producer of any of them.
The deal's headline term is unenforceable in practice. The United States takes the first $500 billion from new mines — but no operator has been named, no survey commissioned, no financing arranged and no insurer identified for extraction inside an active war.
The country never had the capital to develop any of this. Foreign direct investment ran as low as 1% of GDP through the 2010s, and Ukraine has repeatedly trailed the European Union average on the same measure.
The governance record compounds the geology. Ukraine scored 30 on Transparency International's corruption index in 2019, the worst in the comparison set — which matters when a mine requires fifteen years of stable permitting before it produces anything.
China solved the same problem with a different instrument. It built roads, hospitals and the mines themselves in the Congo in exchange for a 68% share of lithium and cobalt, and went from under 2% of sub-Saharan Africa's external public debt in 2005 to nearly a quarter today.
Common questions
Has America made a minerals deal like this before?
Twice, and lost both to China. In 2010 a Pentagon memo valued Afghanistan's untapped minerals at nearly $1 trillion and floated the country as the Saudi Arabia of lithium; the Mes Aynak copper concession went to China Metallurgical Group for $3.4 billion, ahead of American, Canadian, European and Russian bidders. In Iraq, after two US wars, Chinese companies now hold 7.27% of licensed oil and gas project shares against 1.82% for American companies, and won 10 of 13 projects in a recent licensing round.
Why did the Persian Gulf War succeed where Iraq and Afghanistan failed?
Because the objective was a commodity rather than a government. Saddam Hussein invaded Kuwait to control regional supply and therefore price - the same logic China applies to minerals now - and a 42-country coalition including neutral Sweden and Norway removed him from Kuwait in six months, restored the oil flow and stopped. After 9/11 the mission changed from oil and economics to terrorism and democracy, which has no completion condition, and the United States spent two decades in countries whose assets it never acquired.
Will the US actually get Ukraine's minerals?
The historical pattern says no, and the mechanism is consistent. America supplies the security and absorbs the cost; the extraction contracts are won later by whoever is willing to finance infrastructure and accept political risk over fifteen-year horizons, which has been China in Afghanistan, Iraq and across Africa. Nothing in the Ukrainian deal changes that - no operator has been named, no survey commissioned since the 1980s, no financing arranged and no insurer identified.
Are Ukraine's minerals really worth $15 trillion?
The figure counts deposits rather than reserves, which is the difference between rock that contains a mineral and rock you can profitably extract. Only a subset of any deposit ever becomes a reserve. The surveys behind the estimate were carried out by Soviet geologists in the 1960s and 1980s and have never been repeated, so the grade, quantity and diversity are all unverified by modern standards. And roughly 40% of what is counted sits under Russian occupation or landmines.
Would Ukraine's minerals reduce American dependence on China?
Not materially, because the lists barely overlap. American exposure to China is concentrated in yttrium (94% of US supply), rare earths (70%), bismuth (67%), magnesium and antimony (63% each), plus gallium where China holds 97% of world production. Ukraine's headline holdings are titanium, manganese, beryllium and lithium. The United States is only 12% import-reliant on beryllium and already holds 60% of the world's supply, and its cobalt comes from Norway, Canada, Finland and Japan.
How long does it take to open a new mine?
An average of 17.9 years from discovery to production for mines that opened between 2020 and 2023, according to S&P Global. Of that, 13.6 years is discovery and exploration, 2.2 years is waiting after feasibility studies, and 2.0 years is construction. The total has been rising — mines opened in 2005–2009 averaged 12.7 years — and the increase comes from exploration, permitting and financing rather than building, so it is not a problem capital alone solves quickly.
What is the US–Ukraine minerals deal?
A proposed arrangement in which Ukraine would contribute half the future revenue from monetizing its natural resources and associated infrastructure to a US-controlled fund, with the United States taking the first $500 billion generated by new mines. It would not draw on revenue from existing mines, oil wells or other producing assets. The practical difficulty is that no operator, survey, financing or insurance exists for extraction inside an active war, so the revenue being divided has no identified path to existing.
Why is Ukraine so poor if it has all these resources?
Because resources in the ground are not wealth until someone extracts them, and Ukraine never had the capital to do it. Foreign direct investment ran as low as 1% of GDP through the 2010s. The post-Soviet collapse took GDP from $80 billion in 1990 to $32 billion by 1999, with a 23% fall in 1994 alone, and by 2019 Ukraine had the lowest GDP per capita in Europe at $3,619 — below Moldova and Kosovo. The economy that did grow was agricultural, not extractive.
Which minerals does China actually control?
China holds 97% of global gallium production, 89% of magnesium, 88% of mercury, 84% of tungsten, 82% of bismuth, 78% of graphite, 70% of rare earths, 69% of silicon, 68% of germanium and 55% of antimony. The position was built from the 1990s onward by mining first and dealing with environmental consequences later, which is the cost Western producers were unwilling to accept — the same trade Britain and the United States made during their own industrializations a century earlier.
How did China secure African minerals?
By financing the infrastructure rather than buying the output. In the Congo it built roads, hospitals and the mines themselves in exchange for a 68% share of lithium and cobalt. Across sub-Saharan Africa its share of external public debt went from under 2% in 2005 to nearly a quarter today, and Chinese capital reached 12% of all foreign direct investment into the continent by 2018. It is a slower and more expensive route than buying commodities, and it produces a position that cannot easily be outbid.
Can Ukraine's minerals be mined during the war?
Not the ones that matter most. About 40% of the deposits in the $15 trillion estimate are in eastern Ukraine, either under Russian occupation or in areas seeded with landmines. Beyond the front line, the obstacles are ordinary but decisive: no modern survey since the 1980s, no named operator, no financing, and no insurer willing to underwrite a fifteen-year capital project in a country under active invasion.
What does Ukraine actually export?
Food, overwhelmingly. Agriculture went from under 2% of exports at independence to over 25% by 2019, overtaking the iron and steel that had led since Soviet times. In 2019 Ukraine produced 36 million metric tons of corn, 29 million of wheat and 9 million of barley — significant in wheat and barley, though the United States produced roughly ten times as much corn. It is an agricultural economy that happens to sit on unexploited geology.
Discussion
America has signed this deal twice and lost both times to the same competitor: Washington supplies the security, Beijing signs the contract afterwards. Why does military presence convert so poorly into commercial access?
No answers yet — be the firstThe Gulf War had a commodity as its objective and a 42-country coalition finished in six months. The wars after 9/11 aimed at terrorism and democracy, which have no completion condition. What does that suggest about how objectives should be written?
No answers yet — be the firstA 2010 Pentagon memo valued Afghanistan's minerals at nearly $1 trillion, and the largest copper concession went to a Chinese state conglomerate for $3.4 billion. What is a resource estimate actually worth as a basis for policy?
No answers yet — be the firstChinese state-backed firms can accept returns and timelines that listed Western companies cannot. Is that an unfair advantage, a different cost of capital, or a different definition of return?
No answers yet — be the firstYou advise on the Ukraine minerals agreement. What single term would you insist on, given this record, and what would you expect to give up to get it?
No answers yet — be the first
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