Ukraine, strategically positioned as a key player in the global supply of critical minerals, holds deposits of 22 out of 34 minerals classified as essential by the European Union. This vast mineral wealth, including rare earth elements vital for high-tech applications, has become a focal point in the country’s negotiations with the United States. Ukrainian President Volodymyr Zelenskyy is set to sign a groundbreaking deal with US President Donald Trump on Friday, offering the United States access to Ukraine’s extensive natural resources, including critical minerals and oil reserves. The deal is not just about resources, but also about rebuilding Ukraine’s war-torn economy.
The primary focus of the deal is to establish a framework for utilizing the revenues generated from Ukraine’s vast mineral reserves. Ukraine and the US have agreed to create a Reconstruction Investment Fund aimed at reinvesting in Ukraine’s reconstruction and development. Under the terms of the deal, Ukraine will contribute 50% of the revenue from state-owned natural resources to the fund, with the remaining 50% yet to be clearly defined in terms of its source and the control the US will have over it. This initiative is part of a broader effort to support Ukraine’s long-term economic stability and prosperity as it rebuilds after the devastation caused by the ongoing war with Russia.
The agreement comes after significant US financial aid to Ukraine, amounting to nearly $183 billion, which has been a lifeline to the Ukrainian economy. President Trump’s demand for $500 billion in potential revenues from Ukraine’s natural resources aims to compensate US taxpayers for the military and humanitarian aid provided to Ukraine.
Ukraine holds a vast array of critical minerals, which are essential for modern industries, from electronics to renewable energy. Among these, rare earth elements (REEs) such as lanthanum, cerium, and neodymium, are in high demand globally, especially in high-tech applications like electronics, aerospace, and renewable energy sectors. Ukraine’s critical mineral reserves constitute about 5% of the global supply, with the country also producing 7% of the world’s titanium, a key metal in aerospace, defense, and manufacturing.
Additionally, Ukraine is sitting on one of Europe’s largest untapped lithium reserves, estimated at 500,000 tonnes. This lithium is especially valuable, given the global shift towards electric vehicles and renewable energy technologies that require lithium-ion batteries. However, many of Ukraine’s richest mineral reserves are in regions controlled by Russia, including the Donetsk and Luhansk areas, where a significant portion of its rare earth elements are located.
Before Russia’s invasion in 2022, Ukraine was home to over 20,000 mineral deposits, with some of the world’s top reserves in coal, gas, uranium, iron, and nickel. However, the war has disrupted access to these critical resources, particularly in the east, where Russia controls vast mineral wealth. Russian occupation of the Donetsk, Luhansk, and Zaporizhia regions has meant that Ukraine is unable to fully tap into these valuable resources, which has had a ripple effect on global supply chains.
The geopolitical complexity of this issue is compounded by the fact that the regions rich in natural resources are some of the most contested in the ongoing war. As Ukraine’s mining sector continues to operate in safer regions, there is increasing international interest in securing long-term investments in these areas, particularly in light of the war’s ongoing impact on global supply chains, particularly in the tech and defense sectors.
When compared to other nations, Ukraine’s rare earth mineral reserves are not as large as those of leading global producers. China, by far the largest producer and processor of rare earth minerals, controls 70% of global rare earth mineral processing. Other significant players include Brazil, India, and Australia. However, Ukraine’s critical mineral wealth gives it a strategic edge in the global market, especially with increasing demand for these resources in the transition to green energy and advanced technologies.
Ukraine’s untapped lithium reserves, which are largely located in areas under Russian control, are considered one of Europe’s largest and are seen as a potentially game-changing asset. With countries like the United States and the European Union looking to diversify their supply chains away from China, Ukraine’s mineral wealth could become a cornerstone in future international trade relationships.
As President Zelenskyy prepares to sign the deal with President Trump, the focus will shift to how the proceeds from Ukraine’s natural resources will be used to support reconstruction efforts in the war-ravaged country. The Reconstruction Investment Fund will be a crucial tool in this regard, though questions remain about the level of US influence over how the funds will be managed.
The deal marks a new chapter in US-Ukraine relations, as both countries look to forge a path toward economic recovery, peace, and stability in the face of the ongoing Russian invasion. For Ukraine, this partnership with the US could offer a crucial lifeline, providing both immediate resources and long-term economic stability.
