War-torn Ukraine can aid the European Union in securing the battery materials it needs to accelerate the transition from fossil fuels to clean energy systems, researchers say.
The eastern European country holds deposits of 25 of the EU’s 34 minerals listed as “critical” to its economy. This includes Europe’s largest reserves of graphite and manganese, which are needed to manufacture batteries for electric vehicles (EVs) and energy storage, as well as titanium, which is used in offshore wind turbines and hydrogen electrolysers.
Ukraine has the potential to become a regional supplier of battery-grade graphite to the EU as the bloc seeks to bolster its mineral supplies and reduce its dependence on China for materials, according to analysis by Forum Energii and Green Deal Ukraïna published this week.
A ‘targeted’ solution to Europe’s needs
Graphite is the most prominent critical mineral by weight in a typical EV or energy storage battery and the booming battery market is causing demand to soar.
But the EU mines less than 0.1% of its total graphite needs and depends heavily on imports from China, which produces over 95% of the world’s battery-grade graphite. In 2024, only around 2% of total EU natural graphite imports came from Ukraine but this share could be much higher, researchers said.
Plans to develop a graphite mine and processing plant outside the village of Balakhivka in central Ukraine, could potentially meet 10% of Europe’s graphite consumption by 2030 and supply the battery industry, according to the report.
The project has been designated as “strategic” by the European Commission, making it eligible for preferential access to EU financing. The European Bank for Reconstruction and Development (EBRD) has signalled its interest in supporting the project.
Danylo Moiseienko, an analyst at Forum Energii and lead author of the report, said Ukraine’s contribution to the EU’s mineral supply will be “targeted…exactly what Europe needs to diversify away from single-source dependencies”.
Over the next two years, the challenge for Ukraine will be to translate its geological potential into a pipeline of mineral projects that qualify for EU support and “make sure that over time, more of the value stays in Ukraine,” he said.
The price of war
Russia’s ongoing war in Ukraine remains a major barrier to developing the country’s mineral potential, however.
Four years of conflict have devastated Ukraine’s energy and transport infrastructure, pushed up the cost of capital and disrupted access to mineral deposits, some of which are now in Russian-occupied territories, including two of Ukraine’s six major graphite deposits.
In addition, Ukraine’s energy system has come under persistent attack from Russian drones and missile strikes, weakening the country’s ability to power energy-hungry mining and processing operations. The World Bank estimates the country’s energy sector has suffered nearly $25 billion worth of damage, with the total cost of rebuilding estimated at more than $90 billion.
Ukraine’s graphite production fell by 88% between 2021 and 2024 due to a temporary shutdown of its only operating mine and electricity supply disruptions from Russian attacks. The report says that during that time, the EU – which signed a minerals partnership with Kyiv to develop its mineral resources – remained the main buyer of Ukrainian graphite, as the country drew down on its stocks.
Ksenia Orynchak, CEO of the National Association of Extractive Industry of Ukraine, said investment in the mineral sector will be an important part of Ukraine’s post-war reconstruction and economic recovery.
“The mining sector is very important for Ukraine’s reconstruction,” she told Climate Home News during an online presentation of the report’s findings. “If our government manages to stay strong and prioritises our extractive industries, our minerals will help rebuild our country,” she said.
EU, US offer window for new funding
But Ukraine faces other challenges to develop its energy transition mineral deposits.
The country’s geological data is outdated and incomplete, the financing and regulatory environment is unattractive to investors, environmental and social standards are not aligned with international norms and the sector is suffering from a shortage of qualified personnel.
Despite these challenges, the country’s significant mineral resources remain widely coveted. Last year, Donald Trump’s administration signed a minerals deal with Kyiv establishing a joint Reconstruction Investment Fund, which will focus on investment in the energy, critical minerals and infrastructure sectors, and gives the US preferential access to Ukrainian minerals.
The International Development Finance Corporation (DFC), the US’s development finance institute, announced an initial $75 million to launch the fund, an amount matched by the Ukrainian government.
But so far, only two oil and gas projects are in line to receive DFC funding, Orynchak said.
The US deal and the EU partnership have opened a window for mineral projects in Ukraine to access financing but they remain limited, experts said.
“The amount announced by the US fund is not even sufficient to fully develop one mine,” said Tetiana Dzhumurat, a principal banker in the natural resources team at the EBRD, which is supporting Ukraine to digitise its paper-based geological data archive.
At the same time, the pipeline of mineral projects ready to be financed remains “thin”, she said. “I think there is potential, but more remains to be done.”
