Ukraine has agreed to a rare earth minerals deal with the US in a bid to secure support to end the war after the Trump administration dropped some of its toughest demands.
As a central point of peace negotiations, the US had been pushing for a deal that would grant it half of Ukraine’s revenues from critical minerals, oil, gas, and stakes in key infrastructure, such as ports, through a joint investment fund.
While negotiations are yet to be finalised, the Financial Times has reported the preliminary agreement establishes a fund in which Ukraine would contribute 50 per cent of proceeds from the “future monetisation” of state-owned mineral resources such as oil and gas, to then be invested in Ukrainian projects.
Included in the deal was a US commitment to back Ukraine’s economic development into the future. Deputy prime minister Olha Stefanishyna told the FT: “The minerals agreement is only part of the picture. We have heard multiple times from the US administration that it’s part of a bigger picture.”
But the deal will not include the US security guarantees keenly sought after by Kyiv.
The FT reported the US dropped Donald Trump’s demand for $500 billion in potential revenue from Ukrainian resources, a condition which was rejected out of hand by Ukrainian president Volodymyr Zelensky.
On Sunday, Mr Zelensky pushed back against the Trump administration’s demands for billions in Ukrainian natural resources as part of the minerals deal. “I am not signing something that 10 generations of Ukrainians will have to repay,” Mr Zelensky had said, indicating that negotiations would continue.
Despite this, negotiations intensified in recent days, with Ukraine’s parliament speaker, Ruslan Stefanchuk, saying that Kyiv aimed to conclude the deal by 24 February, marking the third anniversary of Russia’s full-scale invasion.
Mr Trump suggested on Monday the deal was close to completion. “In fact, [Mr Zelensky] may come in this week or next week to sign the agreement, which would be nice,” he said.
The US president announced earlier that the war-torn country was on board with his plan. “We’re telling Ukraine they have very valuable rare earths,” Mr Trump said.
Below, we look at where these resources are in Ukraine, and why Kyiv has struggled to mine these minerals.
Ukraine is sitting on one of Europe’s largest deposits of critical minerals, including lithium and titanium, much of which is untapped. According to the Institute of Geology, Ukraine possesses rare earth elements such as lanthanum and cerium, used in TVs and lighting; neodymium, used in wind turbines and EV batteries; and erbium and yttrium, whose applications range from nuclear power to lasers. The EU-funded research also indicates that Ukraine has scandium reserves but detailed data is classified.
Mr Zelensky has been trying to develop these resources, estimated to be worth more than £12 trillion, based on figures provided by Forbes Ukraine, for years.
In 2021, he offered outside investors tax breaks and investment rights to help mine these minerals. These efforts were suspended when the full-scale invasion started a year later.
