The Uncertain Promise of the US-Ukraine Minerals Deal

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Before the unceremonious end to the Zelensky-Trump meeting in February 2025 in Washington D.C., a deal on critical minerals between Ukraine and the United States (US) was expected to be a major outcome of the Ukrainian President’s visit. Ukraine has abundant mineral resources that it views as essential for rebuilding the country after the war. While such a deal is far from ideal for Ukraine, it is leveraging its mineral wealth to keep the US engaged in sustaining its war effort. Meanwhile, the US is eager to gain access to these resources, both as a form of repayment, from Trump’s perspective, and to safeguard its supply chains. The US’s heightened interest in Ukraine’s mineral resources stems from a broad consensus over its mineral security concerns and an overreliance on China. The latter has already used its heft in mineral processing to impose bans and export controls on several strategic materials during the ongoing tariff war. Pushing this deal through would allow the US to address this vulnerability and secure resources for various technological development goals.

The US’s heightened interest in Ukraine’s mineral resources stems from a broad consensus over its mineral security concerns and an overreliance on China.

Notwithstanding the acrimonious DC meeting, tensions have dissipated, and negotiations have regained momentum from mid-April 2025. Both parties have signed a memorandum of intent and are expected to finalise a deal soon. The latest draft of this agreement is more expansive than the original and would give the US privileged access to Ukraine’s mineral deposits. The US, however, has pressed for additional concessions. It demanded that an American entity, the International Development Finance Cooperation (IDFC), take control of the Russian state-owned Gazprom natural gas pipeline running across Ukrainian territory, and that Ukraine create a joint investment fund that channels mineral resource income from state and private firms. Notably, the proposed deal did not include any security guarantees from the US, a sticking point for Ukraine as it enters the fourth year of the war. While it benefits both parties, the deal’s overall impact remains uncertain, with numerous obstacles to successful resource extraction and processing.

Ukraine’s Mineral Profile

Ukraine’s mineral resources are concentrated in two areas. The largest is the Ukrainian Shield—a wide belt running through the country’s centre, from the northwest to the southeast, consisting of metamorphic and granitic rocks. The second is a rift basin called the Dnipro-Donets Depression, which is close to Ukraine’s border with Russia and is made up of sedimentary rocks. Between these two regions, Ukraine has some of the world’s top reserves of recoverable coal, gas, iron, manganese, nickel, ore, titanium, and uranium (see figure 1). During the Soviet Era, a massive industrial area centred around steelmaking grew in the southeast. Within a decade of independence, Ukraine had become a significant producer and exporter of many minerals.

Figure 1: Ukraine’s mines, critical mineral reserves and resources

Source: S&P Global

Ukraine has 20,000 surveyed deposits and ore-bearing sites comprising 97 types of minerals. Of the 8,000 proven deposits, almost half were being mined before 2022. Currently, roughly 20 percent of Ukraine’s total potential reserves are in areas occupied by Russia’s military forces. Losing access to these resources has led to global supply chain disruptions, particularly in high-tech and defence sectors. For instance, before the war, 45 to 54 percent of the world’s semiconductor-grade neon, a by-product of steel manufacturing, came from two Ukrainian companies, which closed operations after the attack. Erstwhile Soviet and Ukrainian geoscientists had also identified deposits of lithium and rare earth metals that remain undeveloped.

Challenges in Mineral Development

Critical mineral production can be increased by peacetime investment, and upgrades in technology could provide even greater value to whoever controls them. However, the face value of elements does not capture the significant investment and lead time necessary to extract, process, and sell mineral products. For instance, a deposit takes an average of 16 years from exploration to extraction. Thus, in the short to medium term, it is unlikely that Ukraine’s minerals will make a difference in the global critical minerals supply chains. Moreover, assessments of some of these minerals are based on outdated geological data and classification systems. Data on certain minerals, including rare earths, is also unavailable due to legal restrictions on publicising critical resource information. Other concerns revolve around inefficiency and complex regulatory processes. Further, damage from Russian attacks, disrepair in inactive plants, and power instability due to the destruction of Ukraine’s energy system cast doubt on the industry’s ability to earn a profit even after the conflict ends. Thus, while significant opportunities to exploit Ukraine’s mineral wealth exist going forward, the path to resource development will not be straightforward. Even if Ukraine successfully extracts its critical minerals, the lack of domestic refining capacity means achieving true mineral independence could take longer. In the interim, it may still leave Ukraine and the US reliant on China. This makes the economic rationale for signing the minerals deal tenuous, especially in the short term. As a result, the deal has been marketed as a form of repayment for military aid, even though tangible returns will take years to materialise.

Data on certain minerals, including rare earths, is also unavailable due to legal restrictions on publicising critical resource information. Other concerns revolve around inefficiency and complex regulatory processes.

Implications for the War

Although the North Atlantic Treaty Organization (NATO) membership and security guarantees were off the table, this deal could grant agency to certain Ukrainian demands, such as Ukraine regaining the control of Zaparozhizia nuclear plant (which generates 23 percent of Ukraine’s electricity), the US promising reconstruction of the country, and the US defending Ukraine’s right to have its own army and defence industry. However, the likelihood of Russia accepting the latter demand would be difficult as it would be a departure from its current stance on calling for Ukraine’s demilitarisation.

Reaching any kind of agreement will be difficult as there is a fundamental dissonance in negotiating positions between Russia and Ukraine. The direction and axis of the Russian attack imply that capturing natural resources is a clear objective. Russia has also objected to the deal because it sees the negotiations as Ukraine offering resources it no longer controls, since the shifted frontlines. In February 2025, offering alternatives to the US, Putin proposed joint exploration of rare earth metals with American partners, stating that Russia possesses significantly more resources than Ukraine. He suggested extending potential rare earth exploration deals to include deposits in eastern Ukrainian territories now controlled by Russia.

The US-Ukraine critical minerals deal represents the complexities of balancing economic interests with geopolitical strategy in an unpredictable conflict.

As US peace efforts falter, Ukraine is unlikely to recognise any deal that entails an official recognition of Russian territorial gains. Thus, apart from justifying further US involvement in Ukraine, the agreement does not radically alter the course of the endgame.

Conclusion

The US-Ukraine critical minerals deal represents the complexities of balancing economic interests with geopolitical strategy in an unpredictable conflict. For the US, it is an opportunity to secure access to vital resources, but it also risks further alienating Russia and deepening its involvement in Ukraine without clear, immediate returns. For Ukraine, the agreement promises American interest in maintaining peace in the region and a possible pathway to economic recovery. Contrastingly, it raises domestic concerns about resource sovereignty, especially without explicit security assurances. Given Ukraine’s limited bargaining power, heavy US involvement in its industry could lead to Ukraine losing control over how its natural resources are developed, who profits from them, and how they are used. It could leave Ukraine dependent on fickle foreign interests and undermine its economic and strategic independence. Ultimately, while the deal may serve as a vital lifeline in the short term, its long-term implications will require careful consideration.

Amoha Basrur is a Junior Fellow at the Centre for Security, Strategy, and Technology at the Observer Research Foundation.

Rajoli Siddharth Jayaprakash is a Research Assistant with the Strategic Studies Programme at the Observer Research Foundation

• International Affairs
• Russia and Eurasia
• USA and Canada
• Ukraine critical minerals
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