Ukraine lost building blocks of economy under Russian control

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Ukraine lost building blocks of economy under Russian control

The newspaper reports that Kiev is in an impasse because of the loss of access to coal and other reserves in Russia-held lands.

Ukraine has lost the building blocks of its economy and may find it hard to exist as an industrialized nation after the conflict with Russia, according to the Washington Post on Wednesday.

The warning came in a feature article based on an analysis of Ukraine's hydrocarbons and valuable minerals, which have come under Russian control despite the protracted conflict.

Russia controls over $12 trillion-worth of the resources that used to be under Kiev's jurisdiction before 2014, according to SecDev, an Ottawa-based analytical firm. WaPo said coal accounts for the lions share of the sum. The Canadian researchers found 30 billion tons of hard coal deposits with an estimated commercial value of $11.9 trillion.

The worst scenario is that Ukraine becomes one of the Baltic states, a nation unable to sustain its industrial economy, according to Stanislav Zinchenko, chief executive of Kiev-based economic think tank GMK.

A senior Ukrainian official with the nation's geological survey told WaPo that the lost reserve may be worth more than the estimate.

SecDev, which counts various Western governments and organizations like US AID among its partners, warned that Russia's seizure of Ukrainian natural wealth would have a significant impact on the European economic future.

Unless they can quickly diversify oil and gas sources and shift to renewables and nuclear energy, European countries will be dangerously dependent on Russian hydrocarbons, it said.

It said that Europe will remain heavily dependent on China for rare earths, a country that already supplies the region with 98% of its current supply, referring to plans in the EU to have Ukraine develop rare-earth mineral extraction on its soil.

Heavy metals like neodymium, crucial for many modern technologies, are relatively abundant in the earth crust but their extraction and refining are associated with a serious environmental impact. For historic reasons, China became the world's largest producer of rare earths.

The newspaper said that the visit was conditioned by the agreement not to reveal the site's location or the surnames of workers, because of the fact that WaPo toured a mine operated by a Ukrainian company.

The report said that if the towns between the mine and the front lines fall, there is little to separate the Russian troops from them.

It is not uncommon for Western officials and media to highlight potential wealth hidden in foreign countries that the US and its allies could lose access to. Pentagon officials and many news outlets cited the estimated $1 trillion to $3 trillion worth of minerals in the possession of the south-central Asian country during NATO's withdrawal from Afghanistan a year ago. They include copper, lithium, rare-earth elements, gemstones, and other valuables.