US and Ukraine Sign Minerals Deal: Check Out the Details

The US and Ukraine have penned a rare-earth minerals agreement that could reshape bilateral economic ties.

Quick Takes

Foundations of the Minerals Deal

The United States and Ukraine have forged a minerals deal that provides the US with prime access to Ukraine’s extensive natural resource reserves, specifically rare earth elements. This agreement was crafted over several months and delayed by tensions between former President Donald Trump and Ukrainian President Vladimir Zelenskyy. As part of the deal, the US will simultaneously help establish a reconstruction fund intended to accelerate Ukraine’s recovery and peace efforts, as noted by Treasury Secretary Scott Bessent.

While the partnership provides mutual benefits, Economy Minister Yulia Svyrydenko has emphasized that Ukraine maintains control over “where and what to extract.” However, absent from the deal are promises of help to deter aggression from Russia, which Ukraine has heavily pushed for.

Economic and Strategic Implications

This minerals pact also includes oil, natural gas, and other elements like titanium, lithium, and uranium. As Ukraine’s mineral industry previously accounted for 6.1% of GDP and 30% of exports, the agreement endeavors to revitalize a sector hampered by Russian occupation. Yet, with 40% of metallic resources inaccessible, challenges remain in extracting these assets effectively.

“This agreement signals clearly to Russia that the Trump administration is committed to a peace process centered on a free, sovereign, and prosperous Ukraine over the long term,” Treasury Secretary Scott Bessent stated.

Under the deal, Ukraine agrees to contribute half of future profits from government-owned mining and resource management to a US-Ukraine-managed reconstruction fund, facilitated by the US International Development Finance Corporation. No funds will be drawn from the fund for a decade.

Criticism and Future Path

The deal has not been well-received by everyone. According to CNBC, Ed Verona, nonresident senior fellow at the Atlantic Council’s Eurasia Center, has expressed skepticism, arguing that Ukraine had “little choice but to acquiesce to terms that reduce it to the status of a virtual colony.” He added, “The history of mineral resources deals offers ample reason to doubt that this one would stand up well over the period typically required to develop large and capital-intensive projects with lead times of up to a decade.”

As the deal unfolds, its real-world impact on Ukraine’s economy and global rare-earth supply chains will become increasingly apparent. Addressing geopolitical, economic, and environmental challenges remains imperative for a deal of this magnitude to succeed. While promising immediate resource access for the United States, the long-term effectiveness of this strategic alliance depends on careful navigation of legislative and regional complexities.