The Kremlin is robbing this nation of the building blocks of its economy – its natural resources. After nearly six months of fighting, Moscow’s war has yielded at least one big reward: expanded control over some of the most mineral-rich lands in Europe. Ukraine has some of the world’s largest reserves of titanium and iron ore, untapped lithium deposits, as well as vast coal deposits. Collectively, they are worth tens of trillions of pounds. The lion’s share of these coal deposits, which for decades have fed Ukraine’s critical steel industry, are concentrated in the east, where Moscow has made the most inroads. That put them in Russian hands, along with significant amounts of other valuable energy deposits and minerals used for everything from aircraft parts to smartphones, according to an analysis for the Washington Post by Canadian geopolitical risk firm SecDev. Russia has vast amounts of natural resources. But Ukraine’s denial of its own has strategically undermined the country’s economy, forcing Kyiv to import coal to keep the lights on in cities and towns. Should the Kremlin succeed in annexing the Ukrainian territory it has seized – as US officials believe they will try to do in the coming months – Kyiv will permanently lose access to nearly two-thirds of its deposits. Ukraine would also lose a myriad of other reserves, including stores of natural gas, oil and rare earth minerals – essential for some high-tech components – that could hamper Western Europe’s search for alternatives to imports from Russia and China. Workers sort coal at a mine in Ukraine’s eastern Donbass region (The Washington Post by Wojciech Grzedzinski) “The worst-case scenario is that Ukraine loses land, no longer has a strong commodity economy and becomes more like one of the Baltic states, a nation that cannot sustain its industrial economy,” said Stanislav Zinchenko, chief executive of GMK, a financial company based in Kyiv. think tank. “This is what Russia wants. To weaken us.” Late last month, 1,200 feet underground at the mine in the Donbas region, soot-choked workers clawed at the black seams of coal with a sense of urgency. Coal cut from the walls powers a nearby power plant, part of an energy grid strained and weakened by the war. “Those who left to fight at the front are fighting for us down here,” said Yuri, a 29-year-old excavator operator. “We have to get as much coal as we can. The country needs it.” Ukraine is widely known as an agricultural powerhouse. But as a parent source of raw materials, it hosts 117 of the 120 most widely used minerals and metals and a major source of fossil fuels. The official websites no longer show geographic locations of these deposits. the government, citing national security, took them down in early spring. A miner operates an excavator in a narrow corridor deep underground (The Washington Post by Wojciech Grzedzinski) However, SecDev’s analysis shows that at least $12.4 trillion of Ukraine’s energy deposits, metals and minerals are now under Russian control. That number represents nearly half the dollar value of the 2,209 deposits reviewed by the company. In addition to 63 percent of the country’s coal deposits, Moscow has confiscated 11 percent of its oil deposits, 20 percent of its natural gas deposits, 42 percent of its metals and 33 percent of its rare earth deposits and other critical minerals including lithium. Some of these deposits are difficult to access or require exploration to assess their viability. Some were overcome either during Moscow’s annexation of Crimea in 2014 or during the Ukrainian government’s eight-year war with Russian-backed separatists in the east. However, since the invasion began in February, the Kremlin has steadily expanded its holdings. According to SecDev and Ukrainian mining and steel industry officials, it has seized 41 coal sites, 27 natural gas sites, 14 propane sites, nine oil sites, six iron ore deposits, two titanium ore sites, two zirconium ore sites, one strontium site. a lithium site, a uranium site, a gold deposit and a major limestone quarry previously used for Ukrainian steel production. The war has made coal mining more dangerous as well as more critical (The Washington Post by Wojciech Grzedzinski) Roman Opimakh, director general of the Ukrainian Geological Institute, said the government was still assessing the effects of the war on its mineral resources. But given how much of Ukraine’s raw materials are in the east and south, he suggested the value of the lost reserves exceeded the total estimated in the independent analysis. “There is a negative asset, which we have lost – resources that we currently use to support our industrial activities and generate energy,” he noted. “But there is another dimension to the minerals of the future that is still underground. Unfortunately, there is a risk that the Ukrainian people will not benefit from the development of these materials.” Most of the country’s oil and gas reserves remain under its control. But for Western Europe, Russia’s extensive land grab in Ukraine amounts to tactical backsliding. “Russia’s occupation of Ukrainian territory has immediate implications for Western energy security,” said Robert Muggah, co-founder of SecDev. “Unless Europeans can quickly diversify their oil and gas sources, they will remain heavily dependent on Russian hydrocarbons.” The biggest threat is to the future of Ukraine. During the 2014 Russian invasion, in which Ukraine lost about 7 percent of its land, critical Western investments in energy and mining were spooked. Today’s war has had the same impact. Russian missiles hit communities not far from coalfields in eastern Donbas region (The Washington Post by Wojciech Grzedzinski) Polish-Ukrainian investment firm Millstone & Co, for example, struck a deal in 2021 with an Australian mining company to actively explore two untapped lithium sites. Once the war started, the companies froze those plans, said Millstone CEO Mykhailo Zhernov. One site – a deposit currently covered by farmland – is now so close to the front line that Zernov remains unsure whether it is under Ukrainian or Russian control. Initial plans to build a lithium battery factory have also been shelved. Analysts say licenses for other mineral deposits sold by the Ukrainian government last year are now trading at steep discounts as investors question the viability of mining. “Every day, Ukrainians are losing their economy,” Zhernov said. “I know many investors who started geological exploration, but stopped because [of the war]. Everything, it’s a gamble now.” Miners travel by rail through miles of underground tunnels during their shift (The Washington Post by Wojciech Grzedzinski) The blow to Ukraine is much worse due to the Russian seizure of key Ukrainian ports and the extensive blockade of the Black Sea. Some analysts see lost shipping lanes as more important than lost mineral reserves — especially coal, despite its current value — as other countries turn to greener energy. “Commodities like coal are not the future, they are the past,” says Anders Aslund, an economist who has long studied Ukraine. “It’s more about whether Ukraine loses its ports, which I don’t think it will. If they didn’t have these ports, they would have to build a whole new infrastructure for exports.” Coal is by far the most abundant of the deposits in Russian-controlled areas of Ukraine. The roughly 30 billion tons of hard coal deposits there have an estimated commercial value of $11.9 trillion, SecDev estimates. They also have symbolic value as a historical source of energy, with the regional metropolises of Donetsk and Luhansk built on the backs of coal mines and steel mills. The toxic combination of the loss of raw materials and damaged, destroyed or confiscated infrastructure has a huge impact on a key industry like steel, which until the war supported 4 million Ukrainians. Two large factories were damaged or destroyed in the siege of Mariupol. Other factories have reduced production and face a number of challenges. Men and women still mining coal in eastern Ukraine see their efforts as patriotic duty after Russia invades (The Washington Post by Wojciech Grzedzinski) Across the country, many of the Soviet-era steel plants still run on coal. However, the nation’s losses to Russian-backed separatists in the east between 2014 and 2017 forced Kyiv to begin importing significant amounts of coal, both for these plants and thermal power plants. In 2021, imports accounted for almost 40 percent of Ukraine’s coal consumption. Along with the coal mines, Russia recently seized a significant deposit of limestone used for steel production. The impact of this has been minimized because Ukraine’s steel production has fallen so much because of the war – 60% to 7% – that factories have been able to make do with lower-quality limestone deposits in the West. But Yuriy Ryzhenkov, chief executive of Ukrainian steel and mining giant Metinvest, warned that a rise to normal levels would mean “we will have to bring it in”. For miners boring into what’s left of coal-rich tunnels in eastern Ukraine, extracting reserves has become an act of patriotism. The Post Office was granted access to a mine there on the condition that its exact location not be revealed and that the full names of the employees be disclosed for security reasons. The energy company that owns the coalfield, DTEK Corp, also cited wartime restrictions on publishing details of strategic…
