In minerals deal first, U.S. delegation scouts Ukrainian mines for potential starter projects
A U.S. delegation scouted Ukrainian titanium, zirconium and hafnium deposits to assess potential starter projects for the U.S.-Ukraine minerals deal, it was announced on Sept. 15, the first such visit since the deal between Kyiv and Washington was signed earlier this year.
Representatives from the U.S. International Development Finance Corporation (DFC) visited the Byrzulivskyi Mining and Processing Plant and the Likarivske deposit in the mineral-rich Kirovohrad Oblast, central Ukraine, alongside their Ukrainian counterparts, Economy, Environment, and Agriculture Minister Oleksii Sobolev wrote on Facebook.
"Such visits are important to assess the potential on the ground, to consider all aspects of future investments– for economic development, environmental responsibility, and the future development of communities," Sobolev wrote.
Both assets are owned by Ukrainian titanium producer Velta Holding, and the company has mined titanium ore on the Byrzulivskyi site for over 14 years. Velta also plans to produce titanium, as well as zirconium and hafnium, minerals used for fuel and control rods in nuclear reactors, at the Likarivske deposit.
From a geological perspective, Likarivske is an extension of the Byrzulivskyi deposit, the company’s CEO Andriy Brodsky told the Kyiv Independent. Velta will also mine the site for materials critical for construction, including clay, sand, and kaolin.
"Our ability to offer an alternative source of critical materials away from China is important for our American partners, while our additional products will be in high demand during the reconstruction process," Brodsky said.
"The project will also create jobs and contribute to the budgets at various levels," he added.
Titanium is one of the 34 key critical materials listed by the EU, and it is used in the defense, aerospace, and tech sectors. Global demand is surging as defense becomes an increasingly hot topic amid boiling global tensions, and the titanium market is projected to reach $53.65 billion by 2034, according to market intelligence firm Precedence Research.
Ukraine is one of the top ten titanium producers in the world, ahead of the U.S., although China dominates the market. Both Washington and Brussels previously relied on Russian titanium imports, which accounted for almost a third of America’s titanium rods and bars before the war.
Moscow’s full-scale invasion of Ukraine triggered a titanium shortage in 2023 after the U.S. and EU sanctioned Russia’s state-owned titanium company VSMPO-AVISMA, supercharging titanium ore prices. While the U.S. and EU still import some Russian titanium, the amount is falling year by year, as they seek alternatives.
Ukraine is positioning its titanium and other critical raw materials as a fruitful opportunity for Western investors who are eyeing up its natural resources following the signing of the minerals deal on April 30. Since then, the DFC and Kyiv have hammered out the framework for an investment fund, with the first board meeting held on Sept. 3.
The deal gives the U.S. special access to investment projects in Ukraine, spanning natural resources, related infrastructure, and even defense projects. For the first ten years, profits from the reconstruction investment fund will be fully reinvested in the economy.
Contrary to reports that the U.S. would secure automatic offtake rights from fund investments, the agreement only guarantees Washington the right to be notified of potential deals and to negotiate. Companies are not required to grant preferential terms and remain free to sell to other buyers.
The board of managers is now creating a list of initial projects that "align with the fund's vision and objectives" that can be "feasibly developed," Deputy Economy Minister and board manager Yegor Perelygin told the Kyiv Independent on Sept. 3.
The board hopes to kickstart the development of three "high-quality" projects in the next 18 months, he added.
