“An important visit to the United States,” said Ukrainian President Volodymyr Zelenskyy in a Friday Facebook post. “In Washington, I met with a bipartisan delegation from the U.S. Senate.”
Zelenskyy said these discussions focused on continued military assistance for Ukraine as it fights off a years-long Russian invasion, relevant legislative initiatives, his meeting with President Donald Trump, and more. However, he didn’t mention the recent agreement regarding rare earth minerals and mining in Ukraine.
According to the Center for Strategic and International Studies, Trump and Zelenskyy had reached a bilateral agreement as of Thursday that would see the U.S. and Ukraine jointly invest in mining Ukraine’s critical minerals. It said this deal is “the first agreement of its kind.”
CNN reported that, while Trump said Wednesday that he was “happy” about the deal, Zelenskyy has been more cautious. The agreement is different than an initial proposal from the Trump administration that called for Ukraine to use its mineral resources to repay the U.S. for an estimated $500 billion in military aid. After Zelenskyy rejected that deal, Trump called him a “dictator,” CNN said.
“According to the Kiel Institute for the World Economy, a German think tank that closely tracks wartime aid to Ukraine, Washington had committed a total of about $124 billion in aid to Ukraine,” the outlet added.
Now, other countries – including the Democratic Republic of Congo – are seeking a similar deal to the one finally hammered out by Trump and Zelenskyy. So, what exactly is the U.S. looking to get out of it?
What minerals does Ukraine have?
Per a BBC report, “Kyiv estimates that about 5% of the world’s ‘critical raw materials’ are in Ukraine.”
These include: 19 million tons of proven reserves of graphite, 7% of Europe’s supplies of titanium, a third of Europe’s lithium deposits, beryllium, uranium, copper, lead, zinc, nickel, cobalt, and manganese, said the report. Ukraine also reportedly has “significant deposits” of rare earth metals – 17 elements used to make magnets, batteries and more.
During a Feb. 20 press briefing, U.S. National Security Advisor Mike Waltz also said that a currently damaged aluminum foundry in Ukraine has enough of the material to account for America’s entire imports of aluminum for an entire year.
However, the CSIS noted that “there is very limited data on whether Ukraine’s rare earth elements and other strategic materials are commercially viable to mine.” Citing a former director general of the Ukrainian Geological Survey, it said there is no modern assessment of rare earth reserves in Ukraine and that existing mapping was done 30 to 60 years ago by the Soviet Union.
Why does the U.S. want them?
“Rare earth elements (REEs), which comprise of only 17 elements from the entire periodic table, play a critical role to our national security, energy independence, environmental future, and economic growth,” according to the U.S. Department of Energy.
Right now, the U.S. depends on imports from China for much of the minerals that it needs, CNN said. It added that China – a nation that the U.S. recently announced additional tariffs on – has dominated the rare minerals market for some time.
“Experts have long warned that relying on China for strategic materials is risky, but the latest trade tensions between Washington and Beijing make it even more important for the US to look for alternative suppliers,” said CNN.
Apart from rare earth minerals, Trump also released an executive order regarding imports of copper this week. This order states that: “The United States faces significant vulnerabilities in the copper supply chain, with increasing reliance on foreign sources for mined, smelted, and refined copper.”
“Copper, scrap copper, and copper’s derivative products play a vital role in defense applications, infrastructure, and emerging technologies, including clean energy, electric vehicles, and advanced electronics,” the order also said.
What does the agreement do?
According to the CSIS, the agreement between the U.S. and Ukraine establishes a joint investment fund. Ukraine is expected to contribute 50% of all revenues earned from the future monetization of all Ukrainian government-owned natural resource assets into this fund. Money from the fund would be reinvested in further development of the natural resource assets.
“Notably, it does not include resources that are already serving as a revenue source to Ukraine, such as the operations of Naftogaz and Ukrnafta, Ukraine’s largest oil and gas producers,” the CSIS said. “This means, the profitability of the fund is entirely dependent on the success of new investments in Ukraine’s resources.”
CNN said that a draft of the deal viewed by the outlet did not include “any firm security guarantees for Kyiv.”
What are the challenges?
A lack of security assurances for Kyiv is one of the potential weaknesses of the deal, per the CSIS.
“Mining companies are reluctant to make long-term investments due to the ongoing security risk in Ukraine,” it explained. “The absence of security assurances in the bilateral agreement further complicates the situation.”
Even if Trump and Zelenskyy are able to broker a peace deal with Russian President Vladimir Putin, the threat of further conflict still looms “given the long-standing nature of the conflict,” it added. February marked the three-year anniversary of the Russian invasion of Ukraine, and before that Russia also annexed Crimea during the tenure of former U.S. President Barack Obama.
If efforts are successful, the CSIS said the U.S. still might not yield benefits for another 20 years, since mining is a long-term process. War in Ukraine has also wiped out infrastructure, which means much work might be needed to get the operations started.
Experts who spoke to Forbes said the deal will “not likely generate significant revenue, at least in the near future,” the outlet said.