How US Access to Ukrainian Resources Will Shape EU Battery Market

Introduction

The EU is deeply reliant on a steady and secure supply of critical minerals to support its green transition, technological innovations, and industrial competitiveness. Among the most crucial resources are rare earth elements like lithium, nickel, cobalt, graphite and titanium which are integral to the battery manufacturing sector and energy storage systems. EU’s commitment to achieving energy independence and advancing the digital and green economy centers on its access to these resources, yet it remains highly dependent on global supply chains, with significant reliance on external producers. In this equation Ukraine emerges as a key player. The country boasts substantial reserves of rare earth elements and minerals, making it an important strategic partner for the EU as these resources are vital to meeting the growing demand for electric vehicle batteries and renewable energy technologies. However, the geopolitical landscape regarding Ukraine has changed significantly in recent years, with its vast mineral resources increasingly under focus by external powers.

The United States recognizes the strategic importance of Ukraine’s mineral wealth, especially in the context of global supply chain stability and its own geopolitical interests and any shift in control or access to these resources will likely have far-reaching implications for EU’s battery sector, Europe’s industrial strategy and green transition. US’ increasing involvement in Ukrainian resource extraction and its broader geopolitical maneuvers signal a potential reshaping of the global minerals market, with considerable consequences for EU’s access to critical rare earth elements.

The EU battery market is evolving quickly and is driven by the surging demand for electric vehicles (EVs) and renewable energy solutions. Two key battery technologies dominate: lithium-ion (Li-ion) and lead-based batteries. Li-ion batteries are the backbone of the green transition, powering EVs and energy storage systems, while lead-based batteries still play a critical role in applications like uninterruptible power supplies and 12V automotive systems.

Li-ion batteries are central to the EU’s ambitions for a greener future and as EVs adoption rises, so does the demand for these batteries. To reduce reliance on external suppliers, the EU is investing heavily in domestic production, with gigafactories emerging in Germany, Hungary, Spain, Italy and Poland. Despite this push, lead-based batteries remain relevant due to their cost-effectiveness and reliability, especially in automotive applications like starting, lighting, and ignition systems, though lithium is gradually making inroads here. A major challenge for both battery types is the need for critical minerals, which are essential for battery production, and the EU depends heavily on imports, exposing it to supply chain disruptions and geopolitical shifts. Besides lithium, which primarily comes from Australia, China, and Chile, EVs are increasing the demand for nickel, cobalt, and graphite, with Indonesia remaining the largest producer of mined ore and refined nickel products. Congo and Indonesia are key cobalt producers, China dominates natural graphite mining, and the top three producers of rare earth elements are China, Australia, and Myanmar. Such geographical concentration of elements critical to the EVs battery market is creating vulnerabilities in Europe’s battery market as well.

Ukraine plays a crucial role in this landscape, with abundant reserves of titanium, lithium, graphite, nickel, cobalt and few other rare earth elements. Although underdeveloped due to years of neglect, limited infrastructure and now the raging conflict, Ukraine’s mineral wealth holds considerable potential. The country is a top producer of titanium, vital for industries ranging from aerospace to batteries. In fact, Ukraine supplied around 120,000 metric tons of titanium in 2024, making it a key partner for the EU. Lithium presents a major opportunity. While Ukraine has not yet scaled commercial production, it holds vast untapped reserves, particularly in the Dnieper-Donetsk Basin. Geological surveys suggest Ukraine may have up to one-third of Europe’s lithium reserves, with exploration projects underway and commercial production expected soon. This could significantly reduce EU’s reliance on distant suppliers. Ukraine also has promising rare earth deposits, including neodymium, cerium, and yttrium, concentrated in the Azov region. However, underdeveloped extraction technologies and ongoing conflict with Russia pose challenges. Despite these obstacles, Ukraine’s potential as a critical mineral supplier could be transformative if infrastructure investments materialize.

Therefore, Ukraine’s mineral wealth is strategically valuable to both the EU and the US. As geopolitical dynamics evolve, the competition to secure these critical resources will significantly influence the future of global supply chains and the stability and competitiveness of EU’s battery market.

The United States’ growing interest in controlling or influencing the extraction and supply of Ukrainian rare metals will likely reshape global resource dynamics, particularly within the battery and green technology industries. This development will likely impact the EU’s energy transition and battery market, depending on factors like the eventual peace negotiations, Ukraine’s recovery trajectory and shifts in global energy demands.

There are several scenarios through which the US might secure access to Ukrainian rare metals. One possibility involves direct agreements or investments with Ukraine, securing exclusive or significant stakes in critical mineral extraction projects, through aid packages, trade agreements or private-sector investments. Another approach could involve leveraging geopolitical influence to align Ukraine more closely with Western political and economic frameworks, potentially strengthening ties with the EU while using Ukraine’s resources as part of broader strategic negotiations involving Europe, Russia and China. Additionally, US-based mining companies might secure stakes in Ukrainian mining operations, allowing indirect control over extraction.

In response to this, the EU has adopted a “de-risking” strategy focused on diversifying supply chains and reducing dependence on single suppliers, exposure to external shocks, which emphasizes building strong partnerships with politically stable regions and developing more robust, diversified supply networks. Currently, EU is deepening ties with alternative suppliers, including Kazakhstan, Mongolia, and Democratic Republic of Congo, which possess significant mineral reserves. Additionally, the EU is investing in domestic extraction and recycling technologies to minimize reliance on virgin raw materials and promote circular supply chains. Projects like lithium extraction in Portugal and sustainability-focused recycling initiatives across Europe are part of this broader effort to strengthen the resilience of the EU battery market.

Technological advancements in battery chemistry could also play a critical role in reducing EU’s dependency on specific minerals. Innovations such as solid-state, sodium-ion, and graphene-based batteries promise improved performance, lower costs, and reduced reliance on scarce materials. These developments could be central in supporting Europe’s green transition while easing the pressure on critical mineral supply chains. For example, using sodium instead of lithium in some battery applications could diversify material sourcing and enhance supply security. Additionally, increasing the use of recycled materials, including lithium, cobalt, and nickel, could significantly reduce dependence on primary resource extraction. EU’s ability to maintain a competitive edge in the global battery market will likely hinge on its leadership in technological innovation. European manufacturers that capitalize on emerging technologies could sidestep supply chain constraints and offer more sustainable, cost-effective solutions. However, integrating these modern technologies will require substantial investments in research and development, infrastructure, and regulatory frameworks to achieve scalable impact.

In conclusion, the future of the EU battery market will likely be shaped by a complex interplay of geopolitical shifts, evolving supply chains, breakthrough technological innovations and EU’s strategic responses, including diversifying supply sources, investing in cutting-edge technologies, and strengthening international partnerships will be crucial to maintaining its competitiveness in the face of growing demand and competition over Ukrainian natural resources.

The possibility of the US gaining control over Ukraine’s mineral resources could shake up EU’s supply chains considerably, especially when it comes to minerals like lithium, nickel, cobalt and graphite. These materials are the backbone of battery production, powering everything from EVs to renewable energy technologies. If the US secures a strong grip on Ukraine’s resources, the EU could find itself scrambling for alternatives, facing not just shortages and delays, but also rising costs that might slow down its ambitious green transition, as well as obstruct EU’s plans for developing battery market.

If the US locks in exclusive agreements with Ukraine, the ripple effects on EU’s green transition strategy will likely be inevitable. The EU has been working hard to secure its own sources of critical minerals to support the Green Deal and Fit for 55 initiatives, both central to its climate goals. But if Ukraine’s resources are funneled primarily to the US, European manufacturers might face higher production costs and delays in getting the materials they need. This will likely slow EVs production, disrupt renewable energy projects, and ultimately put the EU at a competitive disadvantage in the global green economy. Moreover, EU’s vision of becoming a leader in the EV and battery sectors could take a hit. Higher material costs and supply chain disruptions would likely make European products less competitive, both in terms of price and technological advancement. This would be particularly problematic given the fast pace of innovation in these industries, where delays mean losing out to competitors on other continents.

Environmental concerns also come into play. US involvement in Ukraine’s mining sector could bring advanced technologies and stricter environmental standards, which might be a good thing in terms of sustainable resource extraction. However, there is also the risk that the push for rapid development could lead to ecological damage if not managed carefully. The EU, facing its own pressure to ramp up local mining operations, would need to balance the urgency of securing resources with the need to protect local ecosystems. The EU has been trying to address these sustainability challenges by investing in recycling technologies and promoting a circular economic approach. This means not just focusing on extracting new raw materials but also reusing and recycling existing ones to reduce environmental impact. However, scaling these efforts to meet the demands of the green transition requires time, investment, and strong policy support. In the face of these potential disruptions, the EU will need to adapt quickly. Diversifying supply chains will likely remain a top priority, but the strategy might need to expand beyond traditional resource partnerships. Strengthening ties with politically stable countries, investing in domestic mining projects and accelerating technological innovations in battery chemistry could help mitigate some of the risks.

Technological advancements could be a game-changer. Research into alternative battery materials, such as sodium-ion or solid-state technologies, offers hope for reducing dependence on traditional critical minerals. If these technologies become commercially viable, they will likely ease the pressure on supply chains and provide the EU with a competitive edge, even if access to Ukrainian resources becomes more restricted.

Ultimately, the future of the EU’s battery market will be shaped by how well EU navigates these geopolitical and economic challenges. The stakes are high, not just for Europe’s EVs battery sector and industrial competitiveness but also for its broader climate goals. By investing in diversified supply chains, sustainable technologies, and strategic partnerships, the EU can build the resilience needed to thrive in an increasingly complex global landscape, thereby supporting the EVs battery market.

Geopolitical shifts often lead to price volatility, and the control of Ukrainian rare metals by the US could trigger fluctuations in mineral markets. Prices for rare earth elements, including the ones critical to the EVs battery market could become more unstable, driven by factors such as trade disputes, sanctions or regional conflicts. This kind of unpredictability poses a challenge for the EU, as it would affect the cost structures of key industries like battery manufacturing, EVs and renewable energy. Such volatility might slow down the adoption of green technologies, deter investments and ultimately weaken the competitiveness of European industries that are crucial to EU’s economic future.

Another concern is the vulnerability of supply chains due to over-reliance on foreign sources. If European companies are forced to seek alternative suppliers outside the EU, they may have to depend on regions with less political stability. This could introduce new risks, including further supply disruptions and exposure to sudden trade restrictions or export bans. The shifting control of Ukrainian resources to the US could strain EU’s efforts to maintain a stable and diversified supply of critical minerals, making it harder to secure the materials needed for its ambitious green transition.

Politically, the US’s potential dominance over Ukrainian resources adds layers of complexity to EU’s diplomatic relationships. Tensions could rise not just with the US but could also further escalate with Russia, which has long viewed Ukraine as part of its strategic sphere of influence. If the US increases its control over Ukrainian resources, Russia might perceive this as a direct challenge, possibly leading to retaliatory actions or heightened regional instability. The EU would find itself navigating a delicate balance between maintaining strong transatlantic ties and managing its complex relationship with Russia, which will likely strain EU’s geopolitical posture, affecting both its security and economic interests. Moreover, competition over these resources could spark trade disputes or even trade wars, as seen with the actions of the new US administration. If the US exerts exclusive influence over Ukrainian supplies, the EU might struggle to find alternative sources, leading to tensions between the two allies. This could be further complicated by the actions of other global powers, which might try to counterbalance US dominance by strengthening their control over other critical mineral resources. Such developments likely lead to disrupted global trade dynamics and also create additional geopolitical risks for the EU.

Losing strategic autonomy in managing rare earth resources is another significant risk. The EU has been striving to control key parts of its industrial supply chain, particularly as part of its transition to a green economy. However, if the US gains control over critical Ukrainian resources, the EU may lose its ability to secure these materials on favorable terms. This would limit Europe’s capacity to manage its energy transition and industrial growth independently, potentially disrupting the development momentum in the EVs battery production sector. Such a shift could make the EU battery market more vulnerable to external pressures and reduce its influence on the global green economy.

Environmental and ethical concerns also come into play with the extraction of rare metals, especially from conflict-affected areas like Ukraine currently is. Increased mining activities to meet global demand could lead to environmental degradation, including deforestation, water pollution, and habitat destruction. Although US involvement might bring more advanced mining technologies and stricter environmental standards, there is still a risk that economic interests could overshadow ecological considerations. This poses a challenge for the EU, which prides itself on strict environmental regulations. The potential environmental damage from resource extraction could undermine EU’s sustainability goals and tarnish its green credentials. Ethically, sourcing minerals from conflict zones raises moral issues. If the US controls Ukrainian resources, there will likely be questions about the moral implications of extracting materials from a region still grappling with political instability and conflict. The EU could face criticism for relying on supply chains linked to such areas, with potential backlashes from human rights organizations and environmental groups creating reputational risks for European companies and challenge EU’s leadership role in promoting sustainable and ethical business practices globally. Additionally, the global battery supply chain could face sustainability risks. As European companies seek to secure critical materials, they may inadvertently support practices that contribute to environmental harm and human rights abuses. The EU will need to ensure that its supply chain strategies prioritize not just economic security but also sustainability, transparency, and ethical sourcing. This will be essential for maintaining the integrity of its green transition while mitigating the negative impacts associated with global resource competition.