According to Ukrainian officials, their country is one of the world’s leading locations for important rare earth deposits and other minerals needed to fuel a modern economy, and makes a huge amount of money.
It was a pitch used to entice US President Donald Trump to continue supporting the Kiev government in its war effort, and it worked. Mr Trump has a keen eye on Ukraine, but only for its natural resources, not to help it secure a stable post-war peace.
“The offer of critical minerals is clearly an opportunity for Ukraine to secure its security. It has extremely important resources like titanium, uranium and other resources. And if Russia gets those resources, it would be a disaster for Kiev’s allies,” a senior official familiar with the negotiations told Politico on condition of anonymity.
But the mineral gamble has turned into a political disaster, and Ukraine may not even have the vast resources it promised. Plus, extracting any minerals from the ground would cost billions of dollars and could take decades—not the timeline Trump envisioned.
The minerals were originally part of a peace deal brokered by Ukrainian President Volodymyr Zelensky last year. The package also included an invitation for Ukraine to join NATO and a commitment from the West to continue supplying weapons to Ukraine to ensure its victory over Russia.
But now the only thing worth worrying about in that deal is minerals, and they have become an existential problem for Ukraine.
Kiev was stunned when US Treasury Secretary Scott Bessent showed up in Ukraine in February with a draft agreement that would have required Ukraine to hand over half of its rare earth minerals to US companies. Mr Zelensky reacted with outrage.
After Ukraine’s pushback, the two sides negotiated a more equitable deal that Mr. Zelensky was supposed to sign at the White House on February 28. But that meeting turned into a disaster as Mr. Trump and Vice President JD Vance launched attacks on Mr. Zelensky, who was ejected from the Oval Office without a deal.
The US then put forward another proposal, which contained all the most unfavorable terms for Ukraine, just like the original draft agreement.
The proposal offers no security guarantees and no additional aid or investment to Ukraine, but gives the US preferential access to all of Ukraine’s natural resources as well as financial control over the state reconstruction fund and all of the projects it manages – until Kiev repays the billions of dollars to the US to offset the initial military aid disbursed as grants.
“The current draft significantly undermines the strategic balance, limiting Ukraine’s tax and regulatory autonomy,” said Volodymyr Landa, senior analyst at the Kiev-based Center for Economic Strategy.
The deal also jeopardizes Ukraine’s chances of joining the European Union because it violates EU competition and environmental laws, Landa said, while paying billions of dollars to the United States could scare off investors.
“Other partners may not accept the fact that their aid money is being pumped out of Ukraine to support a third party,” Mr. Landa said.
But the Ukrainian government does not want to provoke another bout of Trump’s wrath, so officials are refraining from criticizing the new version of the mineral deal. Instead, Kiev is trying to fine-tune the proposed deal without angering Trump.
“Last time, the Ukrainians had to explain that some of the things the US wanted from Ukraine would not happen because they violated our laws and our Constitution. So let’s change the agreement to make it work. Now we have to have that discussion again,” the senior official said.
“Treasure” hidden underground
Another serious question that needs an answer is: how many minerals does Ukraine really have?
The country has about 5% of the world’s rare earth reserves, according to the United Nations. These include lithium, beryllium, niobium, tantalum, titanium, nickel, cobalt, graphite and phosphate, elements that are important for the energy, technology and defense sectors, said Alla Vasylenko, a senior researcher at the Geological Research Institute of the National Academy of Sciences of Ukraine.
“Most of them were discovered in the 1960s-1980s. At that time, researchers did not pay attention to issues that are very important today: land use and ownership, environmental, sanitary and other restrictions on mining activities, as well as public opinion,” said Vasylenko.
“However, these reserves were certified according to the Soviet system, which foreign investors did not understand. So, theoretically, we can say that Ukraine has the largest lithium reserves in Europe, but to understand their economic potential, we first need to conduct additional studies of our deposits.”
And extracting that wealth from the ground won’t be easy.
Ukraine will only be able to make money from its mining sector once the war is over. The country also needs to repair its badly damaged energy grid.
“Ukraine needs investment, not only in mining but also in processing. The investments should be primarily American – billions of dollars, maybe even tens of billions of dollars in direct investment, loans, equity, debt, various forms,” said Andriy Brodskyi, CEO of Velta Group, Ukraine’s largest private titanium ore producer.
It took Velta seven years to build its titanium oxide mine. Denys Alyoshyn, chief strategy officer at UkrLithiumMining (ULM), said lithium ore extraction would take 10 to 15 years.
ULM bought a 20-year lithium mining license from the Polokhivske mine in the Kirovohrad region of central Ukraine in 2017 for $5 million. But today, the Polokhivske mine still looks like an empty field with a few probes, sensors and drilling rigs.
“For our lithium mine and enrichment plant to start operating, we will need $350 million in investment. Our strategy is to find global strategic partners who will finance us, while we remain a reliable local partner,” Alyoshyn added.
The Ukrainian government’s initial goal was for the United States to be that partner – both providing security to allow the country to recover from the war and deter another Russian attack.
It is unclear whether the deal currently being negotiated would deliver that benefit to Ukraine.
