US-Ukraine Mineral Deal Explained
Resource realpolitik is in vogue.
The US-Ukraine mineral agreement underscores that the subterranean battles for resources hold just as much weight as the conflicts fought on the surface.
Ukrainian President Zelensky is set to visit Washington on Friday, where he is expected to seal a new agreement, marking a pivotal shift in the economic and security dynamics between the two nations
While Ukraine won’t receive formal security guarantees, the deal reflects U.S. concessions, including softening its initial demand for $500 billion in minerals.
US and Ukraine will produce minerals together and 50% of the profits will be spent on a fund to reconstruct and security for Ukraine. Furthermore, Ukraine’s currently produced resources, such as gas, will remain under Ukrainian control.
Ukraine sits atop a treasure trove of 22 critical minerals listed by the U.S. Geological Survey—resources indispensable to American technological, defense, and energy sectors. These are some of the key minerals driving the next generation of military and industrial power:
Limitations Although Ukraine is believed to have significant mineral deposits, there are some serious limitations to consider. Data on the country’s rare earth reserves is outdated, with no modern assessments to determine their commercial viability.
Soviet-era geological surveys remain the primary reference. Even if deposits exist, economic feasibility depends on a range of factors: depth, ore grade, associated by-products, and logistical considerations. Without contemporary mapping, the extent of Ukraine’s mineral wealth remains speculative.
The country’s power grid, meanwhile, is in tatters—half of it lost to the war. This poses a critical obstacle, as mining operations require substantial energy. Without major grid repairs, the prospects for mining are slim in the short term. Investors, too, will likely be cautious.
Mining projects are long-term ventures—spanning decades and requiring billions to develop. With Ukraine still embroiled in a conflict, and the specter of war lingering even if peace is brokered, such investments carry massive risk.
Precedents While the U.S. has never structured a mineral agreement under these terms, the concept is not without precedent. In 2007, China struck a similar deal with the Democratic Republic of the Congo, trading infrastructure for minerals.
Beijing pledged $3 billion for infrastructure projects, securing access to cobalt, copper, and other critical resources. The deposits in southeastern DRC, estimated at $93 billion, underscored the scale of China’s strategic investment.
In much the same way, France’s foothold in the Sahel was accompanied by agreements that granted access to Niger’s lucrative uranium reserves, offering security in return.
But as the 2024 coup d’etat in Niger illustrated, such agreements can unravel swiftly, as geopolitical tides shift unexpectedly. This U.S.-Ukraine deal, like those before it, is shaped by complex forces, where the underground riches of a nation may one day decide the balance of power above.
See how China is leveraging its rare earths to change the balance of power in global affairs: