President Trump is nearing a deal with Ukraine for U.S. preferential access to its raw materials, crucial for defense and tech. However, the value of these resources is uncertain, based on outdated Soviet-era surveys. The agreement requires Ukraine to allocate 50% of its natural resource revenues to a national fund, but lacks U.S. security guarantees. Development challenges include significant investment needs, with estimates reaching $15 billion for major mining sites, and reliance on Chinese processing infrastructure. Additionally, valuable resources are in Russian-occupied areas, complicating Ukraine’s recovery efforts and the overall viability of the deal.
President Donald Trump is close to finalizing a deal with Ukraine that would provide the U.S. with preferential access to the country’s extensive raw material reserves. However, the actual worth of these reserves remains uncertain, as estimates are derived from outdated Soviet-era surveys that do not reflect the feasibility or expenses associated with developing these resources.
The most recent draft of the agreement, as reported by Economic Pravda, a Ukrainian newspaper, states that Ukraine will direct 50% of its state-owned natural resource revenues into a fund aimed at investing in the country. Importantly, this deal does not entail any U.S. security assurances. On the surface, the U.S. appears set to gain notable advantages from the agreement, especially since Ukraine’s natural resources and environment ministry asserts that the nation’s bedrock holds about 5% of the world’s critical raw materials.
Among these resources—such as graphite, lithium, titanium, beryllium, and uranium—are essential materials for manufacturing batteries, radar systems, and armor, all of which are vital to the defense and technology sectors. Gaining access to these resources could potentially lessen America’s dependence on Chinese minerals. Nevertheless, the full extent of Ukraine’s mineral wealth remains unclear, with only around 8,000 of the nation’s 20,000 surveyed mineral deposits and sites considered viable.
The advancement of these resources is further hindered by the necessity for substantial investment, estimated at $15 billion for the ten largest known mining prospects, which includes establishing mines, quarries, and processing facilities. Additionally, the extraction process is predicted to be expensive and protracted, with the Ukrainian Geological Survey estimating that developing the Novopoltasvke deposit, one of the world’s largest rare earth sites, could require an investment of $300 million.
China presently monopolizes the rare earth supply chain, processing close to 90% of the global rare earths. The U.S. and other leading producers lack the necessary infrastructure and expertise to refine these minerals, making them dependent on Beijing. Establishing this infrastructure in Ukraine would take years and likely be less efficient than transporting the minerals to China for processing.
The deal is also made more complex by the fact that several promising mineral sites are situated in areas under Russian occupation. Ukrainian Deputy Prime Minister Yulia Svyrydenko estimates that Russia is occupying $350 billion worth of Ukraine’s critical mineral and gas reserves. Trump now faces the choice of either increasing support for Ukraine to help reclaim its occupied territories or pursuing an alternative agreement with Russia. As S&P Global points out, extracting Ukraine’s rare earth elements may not be economically viable due to the technical hurdles and costs involved.