Website: Eurasia.com

Ukraine is positioning itself to enter the global lithium industry as the country prepares to close applications on December 12 for its first-ever lithium Production Sharing Agreement, covering the “Dobra” hard-rock deposit. The tender comes as Kyiv seeks to revive its mining and processing base, re-launch geological exploration and build a broader critical minerals sector that could anchor Ukraine more firmly within Western supply chains.

The discussion follows earlier analysis of Ukraine’s role in the titanium value chain, where the country has long-standing expertise, an established presence in chloride-process feedstock and a historically strong resource base. Supporters argue that many of these strengths can be leveraged as Ukraine moves toward lithium — a metal undergoing rapid transformation and increasing geopolitical scrutiny.

Over the past five years, lithium has shifted from a niche commodity to a key industrial material, underpinning electric vehicles, energy storage, digital infrastructure and AI-related growth. The sector has already weathered a full boom–bust cycle, marked by a dramatic 2022 price spike followed by a steep crash in 2023–2024. Market volatility, combined with the bankruptcy of battery producer Northvolt, production curtailments in Australia, the rise of South American brines and China’s entrenched dominance in refining, has reshaped the landscape for emerging producers.

Despite turbulence, analysts expect demand to expand sharply. Forecasts from the IEA, Benchmark Mineral Intelligence and others project global lithium demand in 2035 at 3.5–4 million tonnes of LCE — three to four times current levels — driven largely by electric vehicles, grid-scale energy storage and the rapid growth of AI data centres. Evolving battery chemistries, including the rise of LFP, sodium-ion and eventual solid-state technologies, are not expected to displace lithium, only alter consumption patterns.

On paper, the supply pipeline appears abundant, but industry experts warn that cost pressures, permitting delays and technology risks significantly constrain real-world output. Many high-cost projects failed as prices retreated to $10,000–$15,000 per tonne, underscoring the importance of cost-competitive Tier-1 and Tier-2 operations. These categories, which encompass top South American brines and efficient hard-rock mines, remain profitable even in downturns. Higher-cost Tier-3 and Tier-4 projects, including complex clays and power-intensive operations, cycle in and out of production, contributing to recurring price shocks.

This tight supply environment supports long-term price expectations of $15,000–$20,000 per tonne, reinforcing the need for new jurisdictions to create competitive conditions for investment. For Ukraine, this means stable permitting, predictable policy and investment frameworks that allow the development of mid-tier, cost-competitive projects.

Any discussion of future lithium supply also centers on China, which refines around two-thirds of global lithium chemicals and manufactures more than 70% of battery cells. Analysts expect China’s geographically domestic market share to shrink as new refining plants come online in Australia, Asia, the U.S. and the EU, but Chinese-controlled capacity abroad will remain substantial. Beijing is also expected to continue using state-backed tools to protect national champions during downturns, creating a competitive landscape that new producers must navigate.

Experts highlight seven factors that determine success for emerging lithium producers: strong cost position, clear routes to market, fast permitting, robust governance and ESG frameworks, integration into geopolitical alliances, R&D capacity and development of human capital. Failure to meet these benchmarks has already sidelined many new entrants, given lithium’s cyclicality and the technological risks of unconventional extraction.

For Ukraine, the “Dobra” PSA and other spodumene prospects offer pathways to enter European supply chains, especially with by-products such as rare metals bolstering project economics. As the world enters what many call the “New Age of Electricity,” Ukraine’s geological resources — whether lithium, graphite, copper, nickel or strategic metals such as titanium and zirconium — could elevate the country from a raw-material holder to a strategic partner.

Analysts argue that the global race will favour countries able to combine strong geology with fast permitting, disciplined policy execution and deep integration into Western supply chains. For Ukraine, the choice is clear: remain a price-taking exporter exposed to market cycles or build the governance, investment environment and industrial partnerships needed to become a reliable supplier in a world increasingly defined by critical minerals competition.

Ukraine is moving to position itself as a future player in the global lithium industry, as the government races to revive its mining and processing sectors and build a broader critical minerals base. The country will close applications on 12 December for its first-ever lithium Production Sharing Agreement (PSA) tender, the “Dobra” hard-rock project, a test case for how Ukraine could integrate into Western battery supply chains.

The tender comes as Kyiv seeks to leverage its geological legacy, long-standing mining expertise and high-quality resource base at a time when governments and companies worldwide are scrambling to secure critical raw materials. Ukraine already has a track record in other strategic metals, including titanium, and until 2021 produced titanium sponge. Supporters of Ukraine’s critical minerals strategy argue that these strengths, combined with proximity to European industrial hubs, make the country a natural diversification option for Western supply chains.

The renewed focus on lithium follows a turbulent five years for the sector. Once a niche material, lithium has become a cornerstone of modern industry, particularly for electric vehicles (EVs), energy storage systems and digital infrastructure. Over that period, global markets have experienced a full boom–bust cycle, with a spectacular price spike in 2022 followed by a sharp correction in 2023–2024. At the same time, the bankruptcy of prominent battery maker Northvolt, production curtailments at Australian mines, the rise of South American brines and the entrenched dominance of Chinese refiners have exposed the vulnerabilities of geographically concentrated supply chains.

Despite the price volatility, analysts broadly agree that demand growth is structural. Forecasts from organisations such as the IEA and leading market consultancies suggest that global lithium demand could reach 3.5–4 million tonnes of lithium carbonate equivalent (LCE) by 2035—roughly three to four times today’s levels. The main drivers remain EVs and stationary energy storage, with additional momentum from the rapid build-out of AI data centres and high-tech grid infrastructure.

Technological developments are reshaping the landscape but are not expected to displace lithium. Lithium iron phosphate (LFP) chemistries have eaten into the market share of nickel-rich cathodes, sodium-ion batteries are emerging in low-cost applications and solid-state technologies could capture a slice of premium EVs by the mid-2030s. Yet these innovations mainly affect how much lithium is used per kilowatt-hour and in which segments, rather than removing the metal from the picture.

On the supply side, the global project pipeline appears abundant on paper. If every announced brine, hard-rock, clay and direct lithium extraction (DLE) project were to proceed as planned, nameplate capacity could cover projected demand. In reality, sector observers highlight significant constraints, with many projects vulnerable to cost inflation, permitting delays and unproven technologies.

Historically, lithium projects have tended to stumble for three main reasons: high operating and capital costs, slow and unpredictable permitting processes, and the technical challenges of scaling complex flowsheets such as DLE or clay leaching from pilot to commercial levels. The latest downturn, which saw prices fall from $70,000–80,000 per tonne in 2022 to around $10,000–15,000, quickly exposed high-cost operators and heavily leveraged projects. This has reinforced the view that, although global volumes may look sufficient over a decade-long horizon, availability in any given year can be tight, supporting long-term price expectations in the $15,000–20,000 per tonne LCE range.

This dynamic is reflected in a sharply tiered cost curve. At the low end, Tier-1 producers—top-tier South American brines, the most efficient hard-rock operations and select DLE projects—can operate at $5,000–7,000 per tonne LCE and remain profitable even in deep downturns. Tier-2 operators, typically competitive hard-rock, some clay and maturing DLE projects, sit in the $7,000–10,000 range and can generate strong returns at mid-cycle prices if projects are well structured and debt is manageable. Tier-3 and Tier-4 projects, often involving complex clays, high-cost lepidolite or power-intensive flowsheets, form the marginal and speculative end of the market, entering only during price spikes and shutting down when conditions normalise.

Price overshoots occur when demand growth or disruptions force the market to rely on these more expensive sources of supply, pushing prices far above long-term averages. For new entrants such as Ukraine, the central strategic question is where their projects will sit on this cost curve. Policymakers and investors are increasingly focused on creating conditions that allow new projects to land in Tier-1 or Tier-2, rather than relying on high-cost, short-lived capacity.

Any assessment of Ukraine’s ambitions must also account for China’s entrenched position in the midstream. Chinese companies currently refine around two-thirds of the world’s lithium chemicals and produce more than 70% of battery cells, with domestic champions such as CATL and BYD dominating global markets. By 2035, some refining capacity will likely shift to Australia, East Asia, the US, Europe and the Gulf, but Chinese-owned or Chinese-financed plants are expected to remain deeply embedded across the value chain. Analysts note that Beijing has historically tolerated low margins and selective losses in parts of the chain when doing so secures long-term offtake or strengthens national champions.

For new suppliers, this means they are competing not with a single “Chinese price” but with a spectrum of Chinese cost positions—from ultra-competitive assets to weaker Tier-4 operations—and with a system that can adapt quickly in downturns. Western governments have responded by pushing for “friendshoring” and diversification, expanding financing tools and promoting critical minerals partnerships. In that context, Ukraine is increasingly seen as a potential strategic partner, particularly for Europe.

Experts argue that success for new lithium-producing countries hinges on several factors: a strong cost position, reliable routes to market and logistics, fast and predictable permitting, credible governance and ESG standards, integration into wider industrial and geopolitical blocs, access to R&D and technology alliances, and sustained investment in human capital. At the same time, they warn that many aspiring entrants will fall short due to capital constraints, policy volatility and over-reliance on unproven technologies.

For Ukraine, the “Dobra” PSA and other prospective spodumene deposits could provide a foothold in the European market, particularly if lithium production can be coupled with by-product recovery of other rare and strategic metals. With titanium, zirconium, hafnium, germanium and gallium also part of its broader resource base, Ukraine hopes to evolve from a raw material holder into a strategic partner embedded in Western critical minerals supply chains.

Analysts note that the coming decade, often described as a “New Age of Electricity”, will be driven by lithium, graphite, copper, nickel and uranium, alongside strategic metals such as titanium. Whether Ukraine can translate its geology into durable strategic capability will depend on its ability to deliver competitive Tier-2 projects, streamline permitting, maintain stable policy and deepen integration with Western alliances and investment frameworks. Otherwise, the country risks remaining a price-taking exporter, exposed to the cyclical swings that have defined the lithium market to date.