OP-ED: A strategic metal for a strategic moment - Ukraine’s titanium opportunity

For decades, titanium has been essential to aerospace, defense, and medical manufacturing. It also plays a critical role in the chemical industry. Among the countries involved in this strategic sector, Ukraine stands out for its deep historical expertise and industrial legacy.  Originally the backbone of the Soviet titanium industry, Ukraine was one of the few countries in an exclusive club of titanium sponge producers, who knew the inner workings of the Kroll process. Ukraine was also a country with both chemical processing and metallurgical capabilities, having a whole Institute of Titanium dedicated to the industry and the science behind it. Ukraine was also home to hydrometallurgical facilities that were able to extract zirconium and hafnium.  However, much has changed. The full-scale war launched by Russia has disrupted key industrial sectors in Ukraine and reshaped global markets. Today, titanium metallurgy has become a highly concentrated industry, limited to some active producers. This consolidation has driven structural shifts across the supply chain — from the rise of cluster-based production and aggressive cost curve management to the dominance of price control and certification bottlenecks. As a result, global supply is increasingly shaped by economies of scale and barriers to entry built around quality assurance and strategic integration. How did we arrive at the market landscape we see today? To begin, it is useful to look at the global titanium sponge market. According to data from the U.S. Geological Survey, global titanium sponge production capacity reached 410,000 tons in 2024, with actual output remaining steady at 320,000 tons — unchanged from 2023. China remained the dominant producer, accounting for 68.75% of global output in 2024. The United States has resumed government stockpiling at a rate of 15,000 tons per year, while importing approximately 40,000 tons of titanium sponge in 2024 — almost matching the record-high level reached in 2023. These represent all-time high import volumes. Japan, one of the United States’ key strategic suppliers, operated at 84.3% of its titanium sponge capacity in 2024. Saudi Arabia maintained near-full utilization at 96%, while Kazakhstan operated at roughly 54%. Ukraine, unfortunately, has had to halt titanium sponge production entirely and has reported no output since 2021. To better illustrate the key market players and underlying dynamics, the following section provides a structured comparison of the main geographic centers of titanium metallurgy and the forces shaping this highly concentrated industry. Titanium Sponge China Japan, Saudi Arabia, Kazakhstan Russia Most of it goes to industrial grades (chemicals, marine, plate, pipe) and to China’s own titanium mill products. Exports are minor, but slowly rising. Kroll Process in its cheapest, optimized variation: cheaper electric power, economies of scale,, domestic Mg and Cl2 production, ability to use imported Ti ore/slag at scale. State/local support lowers effective costs. China is capable to run its plants even at loss, due to cluster integration and fiscal stimulation. Also, electricity costs are at their lowest for such production assets. China can drive domestic prices down, feeding the downstream segments and making downstream highly competitive. The business logic is built around economies of scale and a “production first” principle. Almost all of the production goes straight into aerospace/military/medical streams.  The US imported 100% of its sponge in 2024. 97% came from Japan, Saudi Arabia and Kazakhstan. Higher unit cost, especially in the case of Japan. Much tighter quality control. Lower throughput, more scrap. Premium for quality and certification. Margins are supported by quality and long-term contracts. The United States and EU have no other alternative sources at the moment. Premium positioning. Quality and Certification are in priority.  The business logic here is built around aerospace, defense and medical certifications. Titanium sponge flows directly into ingot/billet for Russian defense/aerospace and export. Competitive, especially considering low labor costs and competitive energy inputs. Sanctions and logistics have added significant costs and this has been felt recently. Margins in trouble, move to a 4-day working week. Sanctions are working. Value Chain integration helps the industry stay afloat and helps defend the throughput margins, especially in integration with VAR smelting, forging and aerospace application. The business logic is built on leveraging aerospace certification, and using political pressure in commercial distribution. Now, titanium sponge has to be converted into titanium ingots or billets and then go into forging. The classical approach to producing ingots/billets is the Vacuum Arc Remelting process, which melts a pre-prepared titanium electrode in a vacuum chamber in a strictly controlled environment at incredibly high temperatures. Titanium Smelting Products (VAR, etc) like Ingots/Billets China USA, EU, Japan, Saudi Arabia, Kazakhstan Russia Industrial grade is the issue at the moment for China. The feedstock is domestic. China can leverage economies of scale and can integrate plants with related production assets (sharing costs with TiO2 production lines and with Titanium Sponge manufacturing assets). Highly competitive energy inputs, state funding. Cluster integration and ability to source everything locally.  Cash costs are lower.  This is the strategic center of the Western aerospace industry. In the case for USA and EU, titanium sponge is sourced from Japan, Saudi Arabia and Kazakhstan. High energy and labor costs.  Melting capacity is smaller. Quality and Certification are in priority.  Margins are higher due to premium positioning, and they are more secure in the long-term. Titanium sponge is the midstream output that flows into downstream production. Everything is integrated and the titanium sponge is sourced locally. Goes directly into forging and actual end-product production. Competitive, but sanctions are increasing costs and creating barriers and pressure. The value chain is fully integrated all the way to the end-product. What are the key global developments and industry takeaways that could ultimately pave the way for Ukraine to revitalize its titanium metallurgical industry? First, it is essential to understand that China’s competitive advantage stems from its massive production volumes, economies of scale, and the ability to influence prices through policy and structural levers. However, China remains unprepared to meet the aerospace-grade quality and certification requirements demanded by Western markets. China currently dominates midstream titanium processing, supported by aggressive financial incentives, low-cost energy inputs, vertically integrated industrial clusters, and reliable access to all critical raw materials and technologies. As of September, Chinese titanium sponge prices reached 50,000 yuan per ton (approximately $7,000 ex-works), with many contracts executed in the 45,000–47,000 yuan range. Even allowing for the lower-grade nature of Chinese “industrial” sponge, this represents a striking price inversion compared to estimated production costs. In contrast, Japanese titanium sponge sells for approximately $11,000–13,000  per ton, with Saudi sponge typically priced $500–1,500  lower. Kazakhstani sponge prices fall within a similar range. The price differential — or premium — between Chinese and Japanese–Saudi sponge consistently reaches $4,000–6,000  per ton. The key market barrier justifying this premium remains consistent: quality and certification. The United States and the European Union are home to high-margin, long-term end-users and hold the key to securing offtake contracts that stabilize margins over time. They also serve as global hubs for quality control and certification, making them the most attractive premium markets. Japan, Saudi Arabia, and Kazakhstan are now integrated into the US and EU titanium value chains, supplying them with high-quality midstream products. This alignment reinforces the strategic role of these countries in ensuring certified sponge availability for Western aerospace and defense sectors. Demand for titanium sponge and ingots is expected to grow, driven by market fragmentation and a global trend toward rearmament and strategic stockpiling. In parallel, Western-aligned countries are actively pursuing supply chain diversification and systematically reducing their reliance on Russian titanium. China, meanwhile, is prioritizing domestic industrial development and expanding its own aerospace program. Russia is becoming increasingly isolated, confined to a shrinking number of accessible markets. Expanding titanium sponge production capacity, however, is a slow and capital-intensive process. Japanese and Saudi producers will require hundreds of millions of dollars in CAPEX and close to a decade to meaningfully scale. A greenfield facility with an annual capacity of 10,000–15,000 tons would cost $400–700 million and take 5–8 years to complete. Even a brownfield expansion of 5,000–10,000 tons would require a 3–5-year horizon. This creates a clear opportunity for Ukraine to “fill the gap” in the non-Chinese, non-Russian segment of the titanium sponge market — particularly with a view toward the EU, which currently lacks any domestic sponge production. Ukraine is the only European country with both the mineral base and the industrial legacy to establish certified sponge production and become a strategic supplier to Western markets. Establishing sponge capacity would also lay the groundwork for developing downstream capabilities, including VAR smelting and ingot/billet production, ideally suited for integration into Western supply chains. Market-driving and production-driving factors Global titanium sponge output is expected to grow to 400,000–440,000 tons by 2035. Part of this increase will come from better utilization of existing capacity, while the rest will depend on new production — either through brownfield expansions or greenfield developments. India and Ukraine are the two markets with the strongest potential for successful re-entry into sponge production. Under a base-case scenario, India could reach 2,000–3,000 tons of annual output by 2035. Ukraine, by contrast, has the industrial foundation to rebuild production capacity to 5,000–10,000 tons per year, with the theoretical potential to scale up to 15,000 tons annually. This outcome will largely depend on the trajectory of the war and Ukraine’s ability to develop integrated industrial clusters. Equally important will be the country’s capacity to rebuild and modernize its power generation and distribution infrastructure. A key global driver of titanium metal demand remains the aerospace sector. Growth in aircraft production rates — particularly of the Airbus A320 and Boeing 737 MAX — will be critical. These models are among the most relevant indicators for tracking future titanium consumption. What are the key success factors for Ukraine’s return to titanium metallurgy? Ukraine’s historic strength lies in its mineral resource base — particularly the quality, mineralogy, and chemical properties of its ilmenites and natural rutile. To re-enter the titanium metallurgy market, Ukraine must fully leverage its high-grade deposits, especially chloride-oriented ilmenite and natural rutile. A basic production model based on just one or two local heavy mineral sands deposits could provide sufficient feedstock to sustain 10,000–30,000 tons of high-quality titanium sponge output annually for the next 50 years. A production range of 10,000–15,000 tons per year is both realistic and operationally sustainable for a typical sponge facility. Competing in today’s market by exporting raw ore concentrates alone is increasingly difficult, as global margins have tightened. At the same time, domestic production costs have surged due to wartime disruptions and rising electricity prices. Ukraine’s resource base is diverse — it includes both sulphate- and chloride-oriented ilmenites, along with natural rutile. Ideally, this versatility should be strategically utilized. Even lower-grade ilmenite can be upgraded via the titanium slag route. In addition, Ukraine possesses large ilmenite reserves that could support TiO₂ pigment production, creating not only new export revenue streams but also bolstering the EU’s chemical supply chain resilience. There is a clear need for a new Titanium Cluster in Ukraine, with energy efficiency as a core design principle. Stable and competitively priced electricity is critical for sponge production. The choice of location is also strategic: logistics optimization will be essential to ensure cost-effective operations. Ideally, the cluster would include integrated by-product processing — incorporating zirconium, hafnium, and germanium value chains alongside titanium. The Kroll process (chloride route) used for sponge production depends heavily on three inputs: magnesium, chlorine, and electricity. Of particular concern is magnesium, where China currently controls 85% of the global primary market. Electricity is another major cost driver, accounting for 20–30% of total production cash costs in typical sponge operations. Planning for smelting must begin from the outset. Developing VAR-based ingot and billet production would not only improve margins but also enable greater flexibility in responding to market shifts. A value chain that extends beyond sponge production to include smelting offers more robust control over pricing, throughput, and downstream integration — particularly for exports to Western aerospace and defense sectors. How do you fund this value chain? Capital expenditure (CAPEX) for Ukraine’s titanium value chain can be partially covered through long-term offtake contracts with advance payments. Strategic investment facilities — such as the U.S.–Ukraine Reconstruction Investment Fund — can play a catalytic role as market-makers, offering both financial stability and investor confidence. Even relatively small equity injections can unlock access to large-scale project financing and attract co-investors, particularly in the critical minerals space. Titanium — in its metallic form and aerospace-grade applications — represents a strategic “power play” for Ukraine and its Western allies. End-users and downstream processors can participate in consortium-based financing mechanisms to secure long-term supply stability and ensure alignment with their certification and quality requirements. The objective is to establish full midstream capabilities in Ukraine — progressing from ilmenite or natural rutile to titanium slag (in the case of ilmenite), then to titanium tetrachloride, followed by sponge production, and ultimately smelting into ingots and billets via the VAR process. Ukraine has the mineral base and technical foundation to develop an integrated value chain built around three core stages: Mining and ore concentrate production Titanium sponge production Smelting and ingot production Estimated CAPEX for a 10,000 tons per annum titanium sponge facility ranges from $400 million to $500 million, with a projected payback period of 9–10 years. A 15,000-ton facility would require $650–700 million. For downstream smelting, a production capacity of 8,000–10,000 tons per year — focused on aerospace-grade Ti-6Al-4V alloy — would cost approximately $350 million and yield a payback period of 10–14 years. Scaling smelting up to 15,000 tons annually would require CAPEX of over $400 million. Can it be done?  It is a technically and economically viable path — provided that investment is aligned with long-term offtake, energy resilience, and industrial clustering. Ukraine has the critical ingredients in place: a high-quality resource base, deep technical expertise, and a well-developed transportation network. While the war continues to pose significant challenges, foundational work can already begin — including geological exploration, mine development, ore concentration, tailings reprocessing, and rare metals extraction. Modular, small-footprint production systems could accelerate early-stage progress even under current constraints. Ukraine has consistently demonstrated industrial resilience and a capacity for innovation. Given its location, mineral endowment, and the structural bottlenecks facing Europe’s titanium supply chain, Ukraine represents a natural and strategic location for developing a titanium hub for the West. *Yegor Perelygin is Deputy Minister of Economy, Environment and Agriculture of UkraineWeiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com