US President Donald Trump has chosen to tighten the terms for a rare earth deal, which the leaders of America and Ukraine ineffectively tried to conclude at their White House meeting on February 28. A report to that effect came on March 5 from US’ CBS News, with reference to sources. Agreement parameters may change because the president is now pushing for a "bigger and better deal," a person familiar with the negotiations said.
Just a reminder: the entire idea belongs to Zelensky himself and was originally part of the "victory plan" he unveiled in the fall of 2024. With the deal, he sought to convince his Western sponsors to boost support for Ukraine. The draft agreement was first presented in early February by US Treasury Secretary Scott Bessent. Back then, the Ukrainian president rejected it as uncompliant with national interests in terms of security guarantees, and agreed to keep working on the deal.
In the latest version of its draft, specific security guarantees that Kiev deems as a key priority have not been spelled out because, according to the American side, by linking Ukraine with the United States economically, the document is to provide it with the necessary security shield. Aware of that, Kiev was ready to provide Washington with access to its mineral resources without security guarantees, despite all the bombastic rhetoric. Foreign press claimed Zelensky wanted to use the deal as a factor to "contain Russia," realizing that better economic ties with Washington would help achieve certain stability. Also, he sought to demonstrate that it would be Ukraine, not Russia, to negotiate mineral resources with America, although most of them are already Russian territory.
Let me remind you that in its current version, the draft agreement obliges Ukraine to cede 50 percent of its revenues from exploiting the subsurface to the United States, and not only rare earth minerals but all the valuable deposits, oil and gas, as well as 50 percent of revenues from related infrastructure: terminals and ports. The agreement features a clause on security guarantees, which Kiev insisted upon, though in US-accepted wording. It says that the United States supports Ukraine's efforts to obtain security guarantees needed to establish lasting peace, i.e. the paragraph does not contain specific obligations on the American part. The likely one to carry that burden is Europe.
The following agreement features have to be noted, too. Although the press described the deal as a rare earth element (REE) one, this is not entirely true, or rather far otherwise. 17 metals are classified as rare earths: scandium, samarium, yttrium, lutetium, dysprosium, holmium, erbium, praseodymium, thulium, lanthanum, cerium, dysprosium, ytterbium, terbium, neodymium, europium, promethium. They are widespread enough but have an extremely low ore concentrations, with their extraction being difficult and expensive. Current estimates of Ukraine’s relevant reserves are actually resource base estimates for the Soviet-era Ukrainian SSR. Large-scale geological studies are needed to turn those into proven reserves. Ukraine has mined none of the metals on an industrial scale. Another challenge is technology the country lacks.
Experts say that the only promising metals in the agreement are lithium and titanium. This is probably the reason why it mentions mineral and other resources in general, not just rare earths. To date, some 20,000 deposits of 117 mineral types have been discovered in Ukraine. Of these, there are just over eight thousand reserves of 94 types of industrially vital minerals. Deposits of oil, gas, coal, peat, shale, uranium, iron, manganese, chromium, nickel, titanium, magnesium, aluminum, copper, zinc, and lead have been developed and identified.
Ukrainian authorities have estimated their total cost at $13 to $15 trillion. However, these figures are obtained by simply multiplying the data on Soviet-period resources by the current crude minerals’ cost. These estimates hardly correlate with reality because there is simply no data on the number of reserves economically feasible for extraction. And the Kiev authorities are known for tending to somewhat "embellish" things.
Thus, Kiev claims it owns five percent of the world's total “critical mineral” reserves, including one percent of the world's lithium reserves. Validity of statements to that effect can be judged by the following example. Ukrainian experts stated that the country has the world's largest titanium deposits worth 94 million tons, or 11 percent of the world's overall figure. But foreign experts claim it only accounts for mere one percent of the world's titanium ore deposits, with top three nations here being China (38 percent), Russia (17 percent) and Australia (10 percent). The same can be said about lithium reserves. For example, the mine outside the village of Shevchenko is a major deposit by Ukrainian standards, although by those accepted worldwide it contains minor volumes. And the cost of mining is orders of magnitude higher, because it is located below the surface, and Bolivia, for one, extracts lithium from natural water sources, so it literally pours into people’s hands.
Another problem is that swaths of Ukraine’s natural resources it offered for sale belong to Russian-controlled territories (more than 60 percent of coal and 11 percent of oil, 20 percent of natural gas, 42 percent of ferrous metals,and 33 percent of other ones, including lithium and titanium, as well as REE).
Assessing the timing for which Kiev could repay the Trump-claimed debt to America, present-day Ukraine only produces significant amounts of iron ore and titanium-magnesium ores, the so-called titanium sponge and alumina, apart from oil and gas. Its titanium sponge exports are estimated at $130mln per year, with the total export of minerals accounting for some $1bn. So, the agreement is a rare instance when Zelensky is right, noting that a dozen generations of Ukrainians will have to pay for it eventually. In this regard, let’s note that under Article 13 of his country’s Constitution, "the land, its mineral wealth, atmosphere, water and other natural resources within the territory of Ukraine, the natural resources of its continental shelf, and the exclusive (maritime) economic zone, are objects of the right of property of the Ukrainian people." Given the deal’s timing, if signed at all, it would be advisable to amend this article, adding that "50 percent of the income from Ukraine's natural resources belongs to the American people."
As for prospects of signing the agreement within the given scenario, late March 2 saw Zelensky say he was still ready to sign it. But Washington no longer considers the option, as US Treasury Secretary Scott Bessent told CBS, so the American side is at least taking a pause.
Britain’s The Daily Telegraph writes that the agreement, if signed, will deal a blow to EU interests in Ukraine, creating risks of its overdependence on China, which remains the largest REE supplier to the world market. Aware of that, the European Union is also trying to join the carve-up of Ukraine’s resources, albeit belatedly. As deputy head of the European Commission Stefan Sejourne reported on February 26, the European Union insists that Kiev implement the 2021 Memorandum of Understanding regarding graphite production in order to cover 10 percent of EU needs by 2030.
