In Ukraine, a potential arms-for-minerals deal inspires hope and skepticism

KIROVOHRAD REGION, Ukraine — The mineral ilmenite is extracted from mounds of sand deep in the earth and refined using a method that summons the force of gravity, resulting in a substance that glimmers like a moonlit sky.

Ukraine boasts vast reserves of ilmenite — the primary ore used to produce titanium — in the heavy mineral sands that stretch for miles along the country’s embattled east.

Much of it, as with all of Ukraine’s critical minerals industry, is underdeveloped because of war as well as onerous state policies.

That is poised to change if the Trump administration agrees to a deal with Ukraine to exchange critical minerals for continued American military aid.

In the central region of Kirovohrad, an ilmenite open-pit mine is a canyon of precious deposits that its owner is keen to develop with U.S. companies. But many unknowns stand in the way of turning these riches into profit: cost, licensing terms and whether such a deal will be underpinned by security guarantees.

Ukrainian President Volodymyr Zelensky said Saturday at the Munich Security Conference that he did not permit his ministers to sign a mineral resource agreement with the U.S. because the current version is not “ready to protect us, our interests.”

Ukrainian businessmen with knowledge of the minerals industry also privately expressed skepticism about whether a deal is viable. The capital-intensive industry is unlikely to yield results in years, if not decades, because geological data are either limited or classified. Many question what conditions American companies are willing to risk to build up the industry and whether existing Ukrainian policies that have so far deterred local businessmen will accommodate foreign investors.

“The main thing we can gain is certain security guarantees obtained through economic means, so that someone stronger than us has an interest in protecting us,” said Andriy Brodsky, CEO of Velta, a leading titanium mining company in Ukraine.

The question of security guarantees

A deal could help strengthen Kyiv’s relationship with the Trump administration.

The United States is a major consumer of critical raw earth minerals such as lithium and gallium, two elements that Ukraine has in proven reserves. Trump has specifically mentioned rare earth elements, but these are not well researched, according to industry experts.

Titanium, used in aerospace, defense and industry, is also high in demand and the U.S. is a leading importer of ilmenite. Sourcing the minerals from Ukraine would reduce future reliance on Russia and China.

In exchange, Kyiv would continue to receive a steady stream of American weaponry that offers leverage against Moscow and without which Ukraine cannot ward off future Russian aggression in the event of a cease-fire.

The question of security guarantees is a sticking point for companies, Ukrainian businessmen and analysts said. A senior Ukrainian official, speaking anonymously to describe private conversations, said that U.S. companies expressed interest in investing but needed to ensure their billions will be safeguarded in the event of renewed conflict.

Brodsky suggested that the presence of American business interests alone might eventually act as a guarantee.

“If this process starts, it will continue,” he said. “Once the investment figures exceed hundreds of billions, the Americans, a highly pragmatic people, will protect their profits earned on Ukrainian soil. They will defend their interests against Russia, China, Korea, Iran and anyone else. They will protect what they consider theirs.”

Growing American interest

Brodsky said the conversation among U.S. businesses is changing in Kyiv’s favor.

“A lot of people in very serious and wealthy offices are saying that now, we — our country and my company — are in the right place and doing exactly what needs to be done at this moment,” he said.

Ukraine has never been attractive to foreign investors because of prohibitive government policies — not offering incentives to attract foreigners, for instance. Brodsky said international companies will need to pair up with local partners to flourish.

American companies have several ways to enter the market, explained Ksenia Orynchak, director of the National Assn. of Extractive Industries of Ukraine, but would require traversing “certain circles of hell” in Ukraine’s bureaucracy. Teaming up with an existing Ukrainian license owner is possibly the most straightforward.

She said more exploration is needed in the field and hinted existing data may have been acquired through ulterior motives. Under the Soviet system, geologists stood to gain if they claimed to have found large reserves.

“Someone did it so that Moscow would praise Ukrainian geologists or Soviet geologists,” she said.

She advises American investors to lower existing thresholds for exploration because bidding can take place in areas where reserves are only presumed, not proven.

“I believe, and so does the expert community, that this is not right. In fact, we are selling a pig in a poke,” she said.

A historically untapped sector

At the extraction site, the air is dense with ilmenite dust. When the afternoon sun’s rays pierce the darkened space, they sparkle and dance in the air. The soot covers the faces of workers who spend hours inside every day extracting the precious material from sand.

The gravity separation method removes unwanted elements in the ore and water separated from the mineral rains down through metal-lined floors. Workers are used to getting wet and don’t bat an eye. Titanium is developed from the purified ilmenite at a different facility.

Brodsky’s company began when Brodsky bought an expired license for geological exploration and a business plan for $7 million. It would be eight years and many millions more invested before he could even think about production capacity.

The deal also does not factor in a crucial element that could prove challenging later: According to the Constitution, the subsoil where extraction would take place belongs to the Ukrainian people .

“I am very afraid that they already had disapproving reviews, that everything is being given away,” Orynchak said.

Those sensitivities were echoed among workers at the mine. Speaking anonymously to voice his true thoughts without fear or repercussion, one said: “If you have a vegetable garden in your home, do you invite a foreigner to take it?”

The high risk often is a key reason that some Ukrainian businessmen privately express skepticism about the deal.

When one businessman of a major group of companies heard about the arms-for-minerals deal, his first impression was: “This is just hot air. This is a very capital intensive industry. Just to take ground from an open pit will cost you billions. Not millions, billions.”

Kullab and Arhirova write for the Associated Press. Associated Press journalists Kwiyeon Ha in London and Volodymyr Yurchuk contributed to this report. Arhirova reported from Kyiv.