Russia persists in its conflict over natural resources in Ukraine
In the Western world, the conflict in Russia is often viewed as a financially unprofitable endeavor for Russia. However, this perspective doesn't resonate with the Russians. This war is primarily about resources for Russia, as they stand to gain more financially from Ukraine than they would in peace.
The underlying factors driving Russia's economic and material interests in the war remain a puzzle to many in the West. Instead of focusing on speculative or real security interests, it's essential to grasp Russia's financial ledger to comprehend what's at stake.
Predictions suggest that Russia's economic losses due to the war and Western sanctions could reach around $1.3 billion by 2025, according to US Vice President Kamala Harris. The immediate financial outlay for this "special operation" is estimates to be around $250 billion. Although these losses were not anticipated, current gains on Russia's side, while temporary, are significantly higher.
Brutal Battles for "White Gold"
War reports, particularly from the Donbass region, often depict decimated forests and demolished villages, but they fail to highlight the treasures beneath the ground. These riches are typically the motive for the battles. For instance, the Russians have been trying to capture the Ukrainian town of Kurachowe for over two years, which houses lithium worth hundreds of billions of dollars in the Schewtschenko deposit.
The occupiers have already requested permission for lithium mining in the region from Moscow, to the Ministry for Natural Resources and Ecology of the Russian Federation.
The Ukrainian government had granted the Australian company European Lithium the mining rights for this deposit a few weeks before the Russian invasion in December 2021. The application of the Chinese company Chengxin Lithium was rejected at the time. The Australian exploration company claims to be "the first supplier for battery-grade lithium in a fully integrated European battery supply chain." In the summer of 2023, the chairman of European Lithium, Tony Sage, announced that the company would no longer make any claims to the Schewtschenkowskoje field - it is too close to the front.
Lithium: Our Problems Solver
Lithium is labeled as "the material of the future," "white gold," and "oil of the 21st century." It is a metal of extraordinary properties, the lightest in the periodic system, with the highest electrochemical potential and the highest specific heat capacity of solids. With lithium-ion technology, a sustainable energy transition and electromobility are achievable.
European Commission President Ursula von der Leyen expressed concern in a speech at the end of March 2024 about Europe's over-reliance on lithium imports from the People's Republic of China, 97 percent of which are imported from there. "Batteries that power our electric cars will increase the demand for lithium 17-fold by 2050," von der Leyen stated. If the export of lithium from China is limited, "then we really have a problem," warned Economics Minister Robert Habeck in July 2023.
With Ukrainian Lithium, the European Union could significantly reduce its dependency on Chinese suppliers, as the National Mining Association of Ukraine (NEIAU) states that a third of explored Lithium deposits in Europe are located in Ukraine. However, a complete economic integration of Ukraine into the West and a guarantee of its territorial integrity is something China has no economic interest in. This aspect should be considered by "negotiators" in the West who view China as a potential mediator between the warring parties.
Russia's War Haul
A study by the Canadian think tank SecDev concludes that Russia controls energy resources, metals, and minerals worth at least $12.4 billion in the occupied territories of Ukraine, including 41 coal fields (63% of Ukrainian coal reserves), 27 natural gas fields, nine oil fields, six iron ore deposits, two titanium ore deposits, one strontium and one uranium deposit, one gold deposit, and a large limestone quarry. The total value of Ukraine's national mineral reserves is estimated to be over $26 billion.
This assessment by the Canadians was referenced by Russian General Major Vladimir Ovchinsky, a former head of the Russian Interpol, in August 2022 in his article "Lithium and Death." In typical Russian fashion, General Ovchinsky accused "the time for American wars over 'white gold' has come." Only Russia's intervention prevented "direct seizure of Lithium deposits."
Exiled Russian writer Eduard Topol commented on this with the words, "It's clear why Putin marched into Ukraine: This 'military special operation' was actually a 'special operation to seize Ukrainian Lithium.' Putin intended to strangle Europe: If Europe reduces its oil consumption, it would have to be throttled with Lithium," Topol described Putin's position.
Russia can loot more in war than it would lose in peace
A few months before the Russian invasion, the EU and Ukraine had agreed upon a "Green Deal," a nearly groundbreaking transformation plan for Ukraine. The Ukrainian economy had the most energy-intensive operations in the world with the least efficient and most expensive thermal power generation. Now, the country was to become climate neutral by 2060. The EU aimed to establish a Raw Material and Energy Alliance with Kiev, as the enormous potential of Ukraine and its geographical proximity made it an ideal partner for other Europeans.
"Ukraine presents a substantial opportunity for the augmentation of wind energy and solar power systems, and an intriguing edge: the capability to ship eco-friendly hydrogen to Germany, subsequently to the EU, as stated by Andreas Kuhlmann, head of the German Energy Agency (Dena). Approximately two-thirds of the EU's vital, strategically important raw materials, considered critical to their supply, can be mined in substantial quantities in Ukraine, including titanium, magnesium, iron ore, kaolin, manganese, zirconium, graphite, and numerous others.
The environmental ambitions of Europe and the 'green' Ukrainian energy pose existential risks for Russia's commercial and survival strategy, which revolves around the trade of fossil fuels. From an economic standpoint, Russia stands to benefit financially if it achieves its military objectives. Indeed, Russia could net significantly more through wars than it would in peacetime."
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Russia justifies its attack on Ukraine, largely seen as a financially unprofitable endeavor in the West, by arguing that they stand to gain more financially from Ukraine's resources than they would in peace. The Ukrainian town of Kurachowe, rich in lithium, has become the focal point of Russian efforts, with Moscow already requesting permission for mining in the region.
Despite the potential economic losses from the war and Western sanctions, Russia's current gains from Ukraine's resources, although temporary, are significantly higher than what was initially anticipated.
