Abstract
This article explores the geopolitical and economic dimensions of the global race for critical raw materials (CRMs), focusing on Ukraine’s emerging strategic role. As the European Union and the United States strive to secure supply chains essential for decarbonisation, digitalisation, and defence, Ukraine has become a focal point due to its abundant untapped CRM reserves. The piece contrasts the EU’s technocratic, standards-driven partnership approach with the U.S.’s more assertive and commercially advantageous strategy, highlighting concerns over extractive dynamics, value retention, and governance standards. The EU must recalibrate its engagement, anchoring CRM cooperation within Ukraine’s EU accession process and broader strategic integration. The article offers policy recommendations to promote transparent, sustainable, and participatory CRM governance, advocating for Ukraine’s transformation into a green industrial partner rather than a resource periphery. Ultimately, it presents Ukraine’s CRM sector as a litmus test for Europe’s geopolitical vision, democratic values, and green transition ambitions.
Introduction
The EU’s race for competitiveness, security, and strategic autonomy largely depends on access to critical raw materials (CRMs), which unlock decarbonisation, digitalisation, and industrial growth. In this race, the EU is competing with the United States and China to secure supply chains, which has turned resource-rich countries such as Ukraine into geopolitical chessboards.
Global race for CRMs
From batteries and solar panels to missile guidance systems and wind turbines, CRMs enable technologies essential for both strategic autonomy and climate goals. Yet, while the demand curve steepens, control over CRM extraction and processing remains alarmingly skewed in favour of one dominant actor: China.
China currently processes over 80 per cent of the world’s rare earths, dominates the refining of cobalt and graphite, and is rapidly securing lithium and nickel assets across Africa and South America. This commanding position is not accidental but stems from a decades-long industrial strategy focused on resource security, downstream value capture, and global influence. Beijing’s ‘Made in China 2025’ plan explicitly names rare earth elements and battery technologies as strategic priorities. The Chinese government uses export restrictions, foreign investments, and price manipulation to maintain its advantage and exert economic leverage over rivals.
By contrast, the US and the EU are in a scramble to catch up. The EU’s Critical Raw Materials Act, adopted in 2024, sets ambitious targets: sourcing at least 10 per cent of strategic materials domestically, processing 40 per cent within the EU, and limiting dependency on any one country to no more than 65 per cent. The US has likewise issued a series of executive orders and launched the Mineral Security Partnership, aiming to secure non-Chinese supply chains by 2030. The Inflation Reduction Act and Defence Production Act have also unlocked federal funds to accelerate domestic mining and processing.
Despite these efforts, both blocs still lack the capacity to match China in the midstream segment – refining and processing – which is often more capital- and expertise-intensive than mining itself. Most European and American companies are only beginning to enter or scale up this space, and they remain reliant on overseas partners for intermediate materials.
According to both US and EU CRM lists, Ukraine holds over 20 types of CRMs, including large deposits of lithium, rare earths, titanium, beryllium, and nickel. The Ukrainian Shield, one of the richest geological formations in Europe, remains largely untapped.
Even in the midst of Russia’s war of aggression, Ukraine’s geological wealth and its aspirations for EU accession make it a strategic opportunity. The recently ratified US–Ukraine Economic Partnership Agreement, which grants US investors privileged access to Ukrainian mineral resources, has dramatically altered the landscape. For the EU, this development threatens to reduce its influence over a near-neighbour with immense strategic value unless proactive steps are taken to deepen collaboration and invest in long-term partnerships.
As the global race for CRMs intensifies, Ukraine represents not just a mining frontier but also a litmus test for Europe’s geopolitical resilience and strategic foresight. Whoever secures sustainable and ethical access to Ukraine’s resources will gain a formidable edge in the twenty-first-century scramble for autonomy, security, and technological leadership.
Competing blueprints: US and EU CRM agreements with Ukraine
As Ukraine emerges as a strategic epicentre in the global contest for CRMs, both the US and the EU are vying for influence through competing partnership models. At stake is not only access to one of Europe’s richest geological zones but also the values and governance structures that will shape its post-war economy.
The EU has taken a technocratic, capacity-building approach. It holds two formal agreements with Ukraine: the 2021 Strategic Partnership on Raw Materials with the European Commission, and a 2022 memorandum with the European Bank for Reconstruction and Development (EBRD) aimed at modernising geodata systems and facilitating investor access (European Commission, 2022). These frameworks promise technical cooperation across the full spectrum – from geological surveying to transport and monitoring – and aim to align Ukraine’s practices with EU environmental standards and investment norms.
Yet these initiatives, while comprehensive on paper, stop short of delivering what matters most for Ukraine’s economic sovereignty: value retention. Neither agreement includes provisions for developing downstream industries such as battery production or rare earth processing within Ukraine. As a result, Europe risks replicating the extractive dynamics of the past – securing raw materials without ensuring that the wealth they generate stays in the country of origin.
By contrast, the US has moved swiftly to institutionalise strategic control. In May 2025, Ukraine’s parliament ratified an Economic Partnership Agreement that grants US entities preferential access to Ukraine’s deposits of oil, gas, and critical minerals (Government of Ukraine, 2025). Under this deal, revenues from permits and sales of state-owned outputs are split, with 50 per cent channelled into a joint US–Ukraine Reconstruction Investment Fund. While marketed as a win–win for recovery, the agreement effectively embeds US actors at the core of Ukraine’s extractive governance architecture.
European investors, meanwhile, may find themselves at a procedural disadvantage. The new agreement centralises decision-making under a US–Ukraine governance structure and prohibits rejected investors from pursuing ‘substantially similar’ deals outside this framework (Articles 6.4 and 8.1). This exclusivity clause could sharply limit EU participation unless Brussels asserts its strategic and normative leverage.
One way to recalibrate this imbalance is for the EU to anchor the CRM agenda to Ukraine’s EU accession pathway. As a future Member State, Ukraine should be treated not as a third-country quarry, but as a strategic industrial partner. Applying the EU acquis to CRM governance – especially in areas such as environmental safeguards, public consultations, and labour rights – would not only raise the standards of extraction but also reaffirm the EU’s geopolitical presence in Eastern Europe.
It is also worth noting that the US International Development Finance Corporation (DFC) – a key player in implementing the new partnership – lags behind European institutions in environmental and social governance. Scoring just 5.5 out of 20 in the World Benchmarking Alliance’s (2022) Social Benchmark, the DFC has been criticised for weak human rights due diligence, poor stakeholder engagement, and limited transparency (Vesey, 2021). Its reliance on minimal application of the International Finance Corporation’s Performance Standards places it below European peers such as the European Investment Bank (EIB) and EBRD, which operate under more rigorous accountability frameworks.
In this light, neither the US nor the EU agreements with Ukraine represent truly equal partnerships. Both risk cementing Ukraine at the lower end of the global value chain. However, only one offers a pathway to higher environmental integrity, stronger democratic oversight, and eventual integration into a unified European industrial space.
To secure a sustainable future for both Ukraine and Europe, the EU must elevate CRMs to the core of its enlargement strategy. It should champion Ukraine as a model for just, clean, and transparent mining, offer co-financing for domestic value chains, and treat Ukrainian CRM governance not as an extractive opportunity, but as a test of European solidarity and strategic vision.
With Ukraine inside the EU, the bloc would gain not only a vital source of secure CRMs but also a rare opportunity to prove that strategic autonomy and democratic values can go hand in hand.
Recommendations
Securing access to Ukrainian CRMs is not just about economic security – it is a test of Europe’s commitment to strategic autonomy, democratic solidarity, and sustainable development. The EU must act not as a mere buyer, but as a partner shaping Ukraine’s transformation in line with shared values. In doing so, it will secure both materials for the green transition and trust for a common future.
- Elaborate and elevate CRM cooperation in the Ukraine accession negotiations
The European Commission and EBRD should review the two Memoranda of Understanding with Ukraine with the aim of promoting an ambitious agenda, coupled with the EU accession negotiations and upgraded to the level of EU–Ukraine cooperation in the energy, trade, and security sectors.
- Tie CRM access to Ukraine’s EU accession process and Chapter 27 (Environment)
The EU must ensure that access to Ukraine’s CRMs is conditioned on progress in adopting the EU environmental acquis, especially in areas of environmental impact assessment, waste management, water protection, and public participation. Fast-track alignment with the European Green Deal, Taxonomy Regulation, and Raw Materials Act will help avoid ecological degradation while fostering regulatory coherence across borders. The EU should express interest in holding consultations and negotiations with Ukraine to review the agreement if necessary.
- Promote transparent and participatory governance of mineral resources
Learning from the implementation of the EU Cohesion Policy and the European Code of Conduct on Partnership, the EU should support the establishment of monitoring committees in Ukraine involving civil society, environmental NGOs, and veterans groups to oversee CRM projects. This participatory model boosts legitimacy, flags risky investments early, and aligns with the Ukraine Facility Regulation’s democratic standards.
- Invest in green and circular mining value chains
European investments in Ukraine should focus on upstream and midstream segments, including refining, battery component production, and recycling. These projects must adhere to EU principles of circularity, ‘do no significant harm’ (DNSH), and high sustainability criteria. The EU can mobilise the Global Gateway initiative, Innovation Fund, and EIB to finance infrastructure and technology that keep value added in Ukraine while supporting EU climate goals.
- Develop a CRM tracing and certification mechanism with Ukraine
The EU should help Ukraine establish a traceability and certification system – akin to the Forest Law Enforcement, Governance and Trade (FLEGT) mechanism – to ensure that CRMs exported to the EU meet ethical, environmental, and labour standards. This system will serve as a competitive advantage for Ukrainian exports vis-à-vis less transparent suppliers and guard against resource-driven corruption.
- Counterbalance US influence through multi-stakeholder European consortia
Rather than competing directly with the US, the EU should consolidate public–private CRM consortia with Ukrainian partners that provide technology, capital, and ESG-compliant frameworks. These consortia should be led by entities capable of delivering long-term strategic engagement, not short-term profit extraction.
- Support conflict-sensitive resource governance
Given the ongoing war, EU policies must account for the security risks of extractive investments. Resource projects should be mapped against conflict-sensitive criteria and avoid regions at high risk of militarisation or occupation. Strengthening Ukraine’s governance capacity and resilience in these areas is essential to prevent resource-fuelled instability.
References
- European Commission. (2022). ‘EU–Ukraine Strategic Partnership on Raw Materials: The European Bank of Reconstruction and Development Will Support Digitalisation of Geological Data in Ukraine’. 17 November, https://enlargement.ec.europa.eu/news/eu-ukraine-strategic-partnership-raw-materials-european-bank-reconstruction-and-development-will-2022-11-17_en?utm_source=chatgpt.com.
- Government of Ukraine. (2025). ‘Agreement between the Government of Ukraine and the Government of the United States of America on the Establishment of a United States–Ukraine Reconstruction Investment Fund’. https://www.kmu.gov.ua/storage/app/uploads/public/681/33c/e8f/68133ce8f2e82842702204.pdf.
- Vesey. C. (2021). ‘How Can the DFC Strengthen Its Environmental, Social, and Accountability Standards?’. BIC (Bank Information Center), https://bankinformationcenter.org/en-us/update/how-can-the-dfc-strengthen-its-environmental-social/?utm_source=chatgpt.com.
- World Benchmarking Alliance. (2022). ‘Social Benchmark: DFC’. https://www.worldbenchmarkingalliance.org/publication/social/companies/dfc/?utm_source=chatgpt.com.
