Following a remarkable White House altercation between President Donald Trump and his Ukrainian counterpart, Volodymyr Zelensky, Ukraine’s treasure wealth of rare earths and other vital minerals continues to garner attention.
A pact that would grant the United States access to the war-torn country’s vast natural resources was to be signed during Friday’s Oval Office meeting. But it turned into a public spat in front of the world’s media; Zelensky fled the White House without signing the accord, and a news conference with the two presidents was quickly canceled.
Trump furiously remarked, “You’re not in a good position, you don’t have the cards right now,” during a confrontation between Zelensky and Vice President J.D. Vance about the failure of earlier diplomatic attempts following Russia’s invasion and annexation of Crimea in 2014.
Zelensky was accused by both Trump and Vance of being unappreciative of American assistance in his nation’s conflict with Russia. “You got to be more thankful, because, let me tell you, you don’t have the cards,” Trump stated to Zelensky. “With us, you have the cards, but without us, you don’t have any cards.” After the altercation, Zelensky was ordered to leave the White House, according to CBS.
The meeting on Friday came after a verbal sparring match between Zelensky and Trump, whose administration had once suggested that the United States should get $500 billion in earnings from Ukraine’s rare earth resources. According to sources, such plan is not included in the agreement between the countries.
According to sources, the U.S. government backs Ukraine’s “efforts to obtain security guarantees,” as stated in the deal’s wording. As part of a contract, Zelensky has pressed for strong security guarantees on several occasions.
After the Oval Office meeting on Friday night, Zelensky told Bret Baier of Fox News that Ukraine was ready to sign the minerals agreement. “I said that we have to sign this document, and we are ready for this,” Baier replied. “This will be the step, first step, to security guarantees – but it’s not enough.”
“This is so sensitive, you know, just a ceasefire without security guarantees,” Zelensky said. In his words, the Ukrainian people “just want to hear that America are on our side and that America will stay with us, not with Russia.”
Later in the conversation, Zelensky expressed his desire for the sale to be finalized to Baier. “This deal, it was prepared by teams, it was not simple, during weeks,” he stated. “And now it’s ready, I think that they have to sign, the countries have to sign, the ministers have to sign – that’s it.”
Mark Williams, a professor of finance at Boston University’s Questrom School of Business and an expert in risk management, told MarketWatch prior to Friday’s events that the deal seems to be “a lopsided transaction where the U.S. gains billions of dollars’ worth of strategic mineral rights without having to provide an explicit security guarantee.”
“The mineral deal is more of a payment for billions in previous U.S. military aid received and for not freezing near-term funding,” Williams stated.
Here are three factors to consider regarding the possible transaction.
There is disagreement over Ukraine’s whole mineral wealth.
The true value of Ukraine’s mineral resources has been disputed, despite the country’s undeniable riches.
“Immense potential as a major global supplier of critical raw materials essential for industries such as defense, high tech, aerospace and green energy,” the World Economic Forum said of the nation. “With vast reserves of minerals, Ukraine can significantly contribute to the global supply chain for many or all of them.”
According to the World Economic Forum, Ukraine ranks among the top 10 suppliers of mineral resources worldwide, accounting for around 5% of the global total. Only 3,055 of its 20,000+ mineral reserves, which include 116 different types of minerals, were active before to Russia’s full-scale invasion, according to the WEF. With 7% of global titanium reserves, Ukraine has the greatest reserves in Europe. Titanium is utilized in the automotive, aerospace, medical, and marine industries.
In light of this, it has been estimated that Ukraine contains about $11 trillion in mineral riches. Sen. Lindsey Graham, a Republican, stated on CBS’s Face the Nation just last year that Ukraine is “sitting on $10 to $12 trillion of critical minerals.”
“Estimates of Ukraine’s mineral wealth seem to be overblown and the deal suggest that U.S. support for Ukraine under Trump is likely to come with string attached,” in a note released Wednesday by Capital Economics economists Liam Peach and Hamad Hussain.
According to Ian Proud, a former British diplomat and international affairs commentator, “people have raised their eyebrows about the scale of these claims,” MarketWatch reported. “If it is so valuable, why haven’t they benefited from it already?”
The $500 billion U.S. proposal, according to Proud, is “a totally bogus number,” as it more than doubles Ukraine’s GDP, which was just under $179 billion in 2023.
According to Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic & International Studies, there is a “long lead time”—possibly two decades—before the U.S. benefits from the agreement, but Ukraine would probably benefit relatively quickly from a proposed U.S. deal to invest in its rare earths and other critical minerals.
According to Baskaran, the rare earth mapping that is currently in place in Ukraine is between thirty and sixty years old and is based on data from the Soviet Union. “We don’t have a ton of information on whether these deposits are commercially or economically viable to mine.”
According to her, it will be necessary to map and identify Ukraine’s resources, and it can take up to 18 years on average from resource discovery to asset production. That timeline approaches 20 years when you include the investigation of that mapping and the development of the assets.
According to Baskaran, Ukrainian President Zelensky would benefit greatly from this. “He doesn’t have an updated mapping of what’s underground,” he said, and the procedure would reveal what is underground. Investments will also be made to improve energy-related infrastructure because exploration mining is “incredibly energy intensive.”
According to Baskaran, the agreement shows that the United States is “very interested in minerals.” Yet, “given the longevity of the investment you’re talking about – 20 years – there’s no immediate benefit” for the United States.
Opportunities exist in rare-earth mining, but there are also many challenges.
About 20% of Ukraine is currently under Russian control, having invaded the country on a full scale in 2022. According to Capital Economics, an estimated 40% of Ukraine’s mineral and metal deposits are located in areas that are under Russian occupation.
Nonetheless, according to press reports, Russian President Vladimir Putin is prepared to grant access to mineral riches in Ukraine’s Russian-occupied areas.
Proud, a former British diplomat, also cited recent statistics from the Institute for the Study of War, which indicates that a sizable amount of Ukraine’s rare earths, lithium, and uranium are found within Ukrainian-controlled territory.
“In terms of prospects, the stuff is there,” he stated. “Any access to it depends on there being a ceasefire – let’s assume that there’s a ceasefire in place and it holds, there would be access to it.”
“How quickly a company could get a return on mining these materials is the question,” Proud said. “Any Western companies looking to access the minerals would probably be “bent over backwards” to accommodate them,” the expert said.
As seen by the downfall of Colorado-based miner Molycorp Inc., which declared bankruptcy in 2015 due to declining rare earth prices, rare-earths mining may also be a difficult industry.
According to Rob Handfield, a distinguished professor of supply-chain management at North Carolina State University, “it is unclear what the conditions of these mines are after the Russian conflict, but Ukraine could definitely help meet many of the needs for minerals like graphite, which is essential for electrodes in batteries and electrical devices.” “Many of the roads and logistics channels for bringing the product to market may have been damaged.”
The “reality is that most of Ukraine’s mineral reserves are unlikely to be economically viable, especially in the near term,” according to Hussain and Peach of Capital Economics. Ukraine currently produces a few essential minerals, such as titanium, graphite, and gallium, which bring in less than $200 million in export earnings annually.
Even though the Novopoltavske field in Ukraine was identified more than 50 years ago, the economists claimed that the field’s growth has been hindered by its difficulties and expensive expenses. The field is believed to contain uranium, rare earths, and other vital minerals.
According to the Capital Economics researchers, “better access to U.S. funding and technology could make it more worthwhile to exploit a handful of deposits.” “Crucially, though, if the economics of mine development remain unfavorable, most estimated reserves will probably remain in the ground.”
As for any agreement with Ukraine, Steve Hanke, a professor of applied economics at Johns Hopkins University who oversaw the natural-resources portfolio while serving on President Ronald Reagan’s Council of Economic Advisors, told MarketWatch that “it is very problematic.”
