Monday, July 24, 2023

"The green treasure chest buried in Ukraine" (up to $11.5 trillion in minerals)

From the Financial Times, July 24:

Up to $11.5tn worth of minerals needed for the energy transition are located in the country

....And in the meantime, take note of the story below about how Russia’s invasion of Ukraine has unleashed a battle for a vast swath of rare earth minerals that are needed for green tech. And check out the FT report on how extreme heat is reshaping economies. — Gillian Tett

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Ukraine is sitting on a treasure chest to fuel the energy transition

....This obviously has big consequences for geopolitics. But what is less known is that these battles matter enormously for green technology too. Ukraine is sitting on vast reserves of hydrocarbons. But it is also sitting on one of Europe’s biggest deposits of critical minerals needed for electric vehicles and other clean energy applications.

The country has an estimated 500,000 tonnes of lithium, researchers for the National Academy of Sciences of Ukraine said last year. This total edges out Portugal as the biggest lithium resource in Europe. But for now, none of Ukraine’s lithium is mined, the researchers said.

More broadly, Foreign Policy magazine said last year, citing Ukrainian government documents and foreign analysts, that the country had “commercially relevant deposits of 117 of the 120 most-used industrial minerals across more than 8,700 surveyed deposits”. The total value of these deposits — including titanium, iron, neon, nickel and lithium — was estimated as being up to $11.5tn. There are also reserves of other minerals deemed critical by the IEA such as beryllium, niobium, tantalum, titanium and cobalt, along with non-critical elements such as uranium and feldspar — to name but a few.

Before Moscow’s invasion, Ukraine was drawing up plans to develop these resources by offering outside investors tax breaks and investment rights. Unfortunately, those plans did not get very far.

“It’s an incredibly important issue about the war that people don’t understand,” one senior US official told me recently. And what makes it doubly critical is that the western allies are frantically looking for ways to break their dependency on the Chinese supply chains for these minerals.

To return to lithium: China is the world’s third-largest lithium producer and has also been on an “acquisition blitz” for lithium projects worldwide. China still accounts for about 50 per cent of all batteries installed in electric vehicles globally — more than Europe and the US combined, according to Morgan Stanley.

While western car manufacturers and entrepreneurs such as Elon Musk are trying to develop alternative sources of lithium, this is unlikely to deliver rapid results anytime soon, not least because getting permits for the messy work of lithium mining and processing is hard in the US and Europe. Hence the tantalising prospect of trying to develop critical minerals in a place such as Ukraine, which will be desperate for new sources of growth if (or when) the war ends.

Sadly, the Russian authorities are also keenly aware of the geopolitical significance of those minerals, and many reserves are sitting in Russian-controlled land; indeed, western diplomats suspect that the location of these riches was one reason why the Putin regime annexed four territories in eastern Ukraine last year....