Ukraine: Mining, Minerals and Fuel Resources

Ukraine, with a population of approximately 44 million in 2018, is located in Eastern Europe; bordering with Russia in the east and Poland, Romania and Moldova in the west. The country has a total landmass of 603,550 km2 and consists of plateaus and fertile plains.

The national flag of Ukraine.

The national flag of Ukraine.

Image Credits: CIA factbook

The country has abundant reserves of natural resources, including coal, iron ore, natural gas, manganese, salt, oil, graphite, sulfur, kaolin, titanium, nickel, magnesium, timber, and mercury. The estimated GDP of Ukraine in 2018 was estimated to reach $131 billion, which is $19 billion more than it was in 2017.

Overview of Resources

Ukraine has flourishing porcelain, metallurgical, and chemical industries that produce ceramics and building materials. It also has abundant resources of semiprecious and precious stones.

Ukraine is currently home to more than 20,000 deposits of over 200 different types of minerals. Of these minerals include graphite, granite, coal, manganese, uranium, oil, natural gas, sulfur, rock and potassium salts, and nickel reserves. Iron and other ores are also found in several regions of Ukraine. Donbas, with an area of over 50,000 km2, is recognized as the coal base of Ukraine. Over 5% of the world’s iron ore reserves are found in Ukraine.

Industrial Minerals

Ukraine is home to about 5% of the world’s mineral reserves. Globally, the country ranks fourth in the production of rutile, and fifth in the production of titanium sponge. It is also one of the world’s top four producers of gallium.

Ukraine has rich deposits of brimstone and mineral wax, extractions of potassium and rock salts have been carried out for centuries. Additionally, the Nikopol basin in Ukraine has the world’s largest manganese-ore fields. Natural gas and oil are concentrated at the Black Sea Coast-Crimea oil and gas-bearing regions and Dnipro-Donets.

Metals

The most critical metals produced in Ukraine include aluminum, iron, manganese, and titanium.

The Golden Gate in Kyiv

The Golden Gate in Kyiv. Image Credits: CIA factbook

Ukraine has been ranked eighth in steel production, according to the World Steel Association. The country’s prominent producer of crude steel is Metinvest. In 2010, 69% of steel was produced in oxygen converter furnaces, 26% of steel was developed in open-hearth furnaces, and 5% of steel was developed in electric arc furnaces. From January to November of 2018, Ukrainian steel producers distributed approximately 17 million tons of steel to countries around the world.

Ukraine ranks sixth in global iron ore production. In 2018, Ukraine exported almost 37 billion tons of iron ore, which amounted to a total earning of USD 2.9 billion.

The country is the seventh-highest manganese ore producer in the world. In 2017, 380,000 metric tons (MT) of marketable manganese concentrates were produced by Ukraine, which was a reduction from the 425,000 MT produced in 2016.

Ukraine also ranks ninth in global ilmenite production, which is a critical mineral used as an ore of both titanium and iron, as well as a flux in blast furnaces. In 2018, Ukraine produced 300,000 MT of ilmenite.  

Fossil Fuels

Coal is a necessary fossil fuel found in abundance in Ukraine. Coal is extracted from the Lviv-Volyn and Donetsk basins. Donetsk Basin, with an area of 60,000 km2, is the largest basin in Ukraine and is situated in the territory of Lugansk and Donetsk oblasts.

The Baroque Saint Andrew

The Baroque Saint Andrew's Church. Image Credits: CIA factbook

Uranium ore is mined in Kirovograd and Dnepropetrovsk oblasts. It is used as fuel energy in nuclear power plants. Labradorite and granite reserves have been found in Zhytomyr Oblast in the northern part of Ukraine.

Many of Ukraine’s investors have agreed that the environment and financial cost of the country on fossil fuels outweigh the benefits they could experience if Ukraine transitioned to low-carbon technologies.

However, in the last two years, Ukraine’s renewable energy market has doubled as a result of a more significant number of solar panel installations around the country. Ukraine has already scheduled several capacity auctions for solar power plants to take place in 2020.

Investment

Experts feel that investing in Ukraine’s metallurgy sector would increase the competitiveness of production, especially in the iron and steel sector, as ferrous metallurgy is likely to remain the most crucial sector in the country.

Ukraine’s investors recently expressed interest to invest about $2.6 billion in the Ajaokuta Steel Company of Nigeria, which will help re-start the dormant project, provided the project is awarded to the Government of Ukraine. Other areas of partnership with the Nigerian government were also explored for the development of substantial mineral resources.

The Ukrainian President recently signed a law that will change the payment system for subsoil usage for the production of fossil fuels while eliminating the related royalties. However, this bill has been opposed by the Energy and Coal Industry Minister and the American Chamber of Commerce in Ukraine.

In the long term, domestic production in Ukraine will be primarily determined by the demand in foreign markets. In the future, if Ukraine can increase its coal and uranium production, its resource security for power production will also increase.

Disclaimer: The Author of this article does not imply any investment recommendation and some content is speculative in nature. The Author is not affiliated in any way with any companies mentioned and all statistical information is publically available.

Sources and Further Reading

This article was updated on the 18th July, 2019.

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