Ukraine’s mineral wealth, not peace, is the prize Trump seeks

Broader cooperation

The scope of the draft deal extends beyond minerals and rare elements. It also encompasses Ukraine's broader natural resources, including oil and gas, as well as related infrastructure such as ports and liquefied natural gas (LNG) plants.

Trump has presented the agreement as a means to recoup the funds that Washington gave Ukraine during his predecessor Joe Biden, but Trump also wants to exact retribution on Zelenskyy for an incident in July 2019 (that led to his indictment) when he threatened to withhold Congressionally-approved military aid to Ukraine unless Zelenskyy 'dug up dirt' on Biden's son, Hunter, who had worked in Ukraine. 

There is no love lost with Vance, either. Vance accused Zelenskyy of engaging in anti-Republican propaganda in Pennsylvania, when he visited during Biden's presidency to meet and thank the US arms manufacturers in the state whose weapons were helping Ukrainian troops repel the Russian army.

If Russia seizes all of Ukraine, that would conceivably give China yet more of an advantage in cutting-edge technologies, advanced defence and aerospace systems, renewable energy, and industrial manufacturing, owing to its near-monopoly on strategic minerals, given that Moscow and Beijing are strong allies. 

Following his visit to Ukraine, Senator Lindsey Graham affirmed that the country possesses nearly $12tn worth of rare and precious metals, including the largest lithium and titanium reserves in Europe, and substantial deposits of cobalt and nickel—both critical for high-performance batteries, aerospace applications, and military equipment.

Rare graphite elements are concentrated in central and eastern Ukraine, many of which remain under Kyiv's control, but Russian advances (albeit slow) threaten their loss, after having lost many resource-rich and strategically vital cities in the south and east.

Race against China

Were it not for Ukraine, China would have a stranglehold on global graphite supplies, the export of which it has restricted to the United States. Beijing also controls approximately 90% of the world's rare earth mineral processing industry, making it the largest producer of graphite, titanium, and lithium-based products.

Ukraine accounts for 7% of global titanium production, 3% of the world's lithium reserves, and it possesses significant deposits of rare metals such as tantalum, niobium, and beryllium. Ukraine is the world's fifth-largest producer of gallium, a rare metal essential for semiconductor manufacturing. 

It is also a major supplier of neon gas—a critical component in chip production—which China also restricts from export. Prior to Russia's invasion, Ukraine sold the US 90% of its neon gas for semiconductors, but the war closed key production facilities, further straining global supply chains.

The Ukrainian government says it holds reserves of 22 minerals classified by the US as among the 50 critical minerals essential for economic and national security, and the proposed agreement pertains to revenue sharing from the future production of these minerals, rather than existing contracts and ongoing extraction.

National Security Advisor Mike Waltz recently noted that one of Ukraine's destroyed aluminium smelters—if fully restored and operating at full capacity—could produce the same amount of aluminium that the US imports every year.

Rival suitors

Ukraine's rare minerals are also of interest to the European Union. In 2021, the EU signed a memorandum of understanding with Kyiv to foster future cooperation in mining, just as Joe Biden drafted a memorandum last year encouraging US firms to invest in Ukraine's mining sector in exchange for economic incentives for Kyiv. 

Russian President Vladimir Putin has offered to work with US companies to extract rare minerals both in Russian territory and in occupied Ukrainian territory. Collaboration is a long-term commitment. Mine shafts can take 18 years to become operational, depending on their complexity, while construction costs can be up to $1bn, given the necessary separation and purification facilities. 

Some of Ukraine's mineral wealth remains a mystery. Many of the geological surveys date from the Soviet era. Widespread destruction of Ukrainian infrastructure would complicate the access of US private sector mining interests. By contrast, Russia and China—through state-owned enterprises—could mobilise the resources to extract Ukraine's valuable mineral reserves. 

Beyond minerals

Much is at stake. If Trump can forge a Russia-Ukraine peace, and agree a US-Ukraine deal on resources, Ukraine will safeguard its sovereignty and the US will secure its supply of the materials it needs to maintain tech primacy. Yet there is more on offer to the Americans than rare earths. A deeper US-Ukraine tie-up would allow Washington to benefit from Ukraine's advanced defence manufacturing industry. 

In particular, Ukraine's drones have moved warfare forward. Mark Milley, a retired US Army general who served as the chairman of the US Joint Chiefs of Staff during Trump's first term, recently described Ukraine's innovations in reconnaissance and attack systems as one of the most significant transformations in the nature of warfare.

Given its longstanding ties with American and European defence ministries, Ukraine is well-positioned to align its military industries with NATO's defence systems. This would let Kyiv incorporate its weapons and ammunition production into NATO supply chains, which would help lower production costs for all NATO states, including the US. For a cost-conscious US president, that might be of interest.