Prospects of the U.S.-Ukraine minerals deal: Will it be signed soon?

By: Ellen Zhang

U.S. President Donald Trump said on Saturday that the United States is “pretty close” to an agreement with Ukraine on sharing revenue from Ukrainian rare earth minerals and other natural resources as part of efforts to end the conflict. However, sources indicated that the draft deal might “not be the one President Volodymyr Zelenskyy would accept.”

“It is a strange offer to try and take from a country that is a victim of war, more than it costs to pay for its defense,” a source familiar with the negotiations told CNN. Ukrainian state broadcaster Suspilne also reported that work had continued on the document “all night,” but progress was held up by the issue of “security guarantees.”

Zelenskyy has rejected demands from President Trump’s administration for $500 billion in mineral wealth from Ukraine to repay Washington for three years of aid, stating that the U.S. has offered no specific security guarantees. However, the Ukrainian president did confirm on Friday that teams from both Ukraine and the U.S. were still working on an agreement.

The proposal would have seen Washington receiving 50 percent of Ukraine’s critical minerals, including graphite, uranium, titanium and lithium, the latter being a key component in electric car batteries.

Ukrainians are still trying to negotiate amendments because the current draft “does not foresee any American obligations, while Ukraine is expected to provide everything,” the source told CNN.

Why is Trump eyeing Ukrainian minerals?

Rare earth elements are a set of 17 elements that are essential for many kinds of consumer technology, including cellphones, hard drives, and electric and hybrid vehicles. If such a deal is signed, according to a U.S. official familiar with the negotiations, it “would reduce U.S. dependency on China.”

“The draft deal provides America with financial guarantees and, therefore, security guarantees for Ukraine,” the official told CNN.

Cui Zheng, director of Research Center for Russia, Eastern Europe and Central Asian Countries at Liaoning University, echoed this sentiment.

“China holds a dominant position in the global rare earth supply chain, while the U.S. relies heavily on imports of critical minerals such as rare earths,” Professor Cui said in an interview with CGTN. “In recent years, China has gradually tightened its export controls on rare earth minerals, leading to concerns about potential supply disruptions for the U.S. defense and high-tech industries.”

“This move could both alleviate the financial burden on the United States and transform aid into economic benefits,” Professor Cui elaborated, stressing the long-term profits through control over mineral development rights for the U.S., even after the conflict ends. “The raw materials needed for U.S. military production can be ensured,” he added.

Noting that the minerals deal deeply embeds U.S. interests in the resolution of the Russia-Ukraine conflict, Cui said it also increases chips for the U.S. during its subsequent negotiations with Russia.

What are the prospects of U.S.-Ukraine minerals deal?

The shift in Ukraine’s stance on the U.S.-Ukraine minerals deal – from direct rejection to working on an agreement with the U.S. – has been driven partly by pressure by the U.S., Cui said.

Noting the recent U.S.-Russia peace talks in Saudi Arabia and spat between Trump and Zelenskky, Cui said the U.S. has exerted pressure on Zelenskyy and hinted that if Ukraine doesn’t accept the minerals deal, it could impact the continuity of U.S. support when the conflict ends.

“The move binds Ukraine’s postwar reconstruction needs to resource development, forcing it to weigh long-term interests,” Cui said.

Ukraine’s shift in position could also result from a revision of the terms of the deal (such as limiting the proportion of U.S. control) or the arrival of short-term aid promised by the U.S., Cui added.

Sun Taiyi, an associate professor of political science at Christopher Newport University in U.S., emphasized Ukraine’s limited options.

“Without U.S. support and increased European commitments, the war is unsustainable, rendering the sacrifices Ukrainians have made over the past three years in vain. Therefore, securing meaningful commitments or promises from the U.S., even if it requires significant compromises, is preferable to no agreement. Allowing the U.S. access to rare earth materials is more advantageous than ceding them to Russia, as without U.S. assistance, Ukraine may lose these resources to Russian control.”

While negotiations are underway, it’s still uncertain whether the minerals deal will be signed. Experts have questioned the reliability of Ukrainian mineral reserves. Roman Opimakh, former director-general of the Ukrainian Geological Survey, said there was “no modern assessment” of rare earth reserves in Ukraine, and estimates were based on old, Soviet-era studies.

“The data is not modern, we have very little information about what’s there,” Gracelin Baskaran, a director at the U.S. Center for Strategic and International Studies, told Financial Times.

Cui further noticed that European countries worried the minerals deal grants U.S. monopoly of resources, potentially sidelining European interests.

“Once the deal is signed, the EU could pass legislation to restrict Ukraine’s resource exports, weakening the implementation of the deal,” Cui added.