US and Ukraine sign minerals deal set to reduce China’s rare earths dominance

Credit: Joshua Sukoff/Shutterstock

AFTER months of negotiations, the US and Ukraine have reached an agreement to equally share profits from the future sale of Ukraine’s mineral, oil, and gas reserves.

The US-Ukraine Reconstruction Investment Fund will see Ukraine retain “full control over its mineral resources, infrastructure and natural resources”, which is reported to be worth US$350bn.

However, as its joint partner, the US will have offtake rights that ensure it is first in line for resources before Ukraine is allowed to offer them to other countries.

The agreement is said to provide the US a financial incentive to continue supplying military aid to Ukraine in its war with Russia.

The deal will also look to drive private sector investment into Ukrainian resources and infrastructure, with the country contributing half of its own revenues into the exploitation of new minerals, oil, and gas projects.

Ukraine resources

Ukraine is reported to have around 5% of the world’s rare earth commodities, as well as valuable metals and minerals, including iron, titanium and gallium. These materials are essential for the development of green technologies, including battery systems and electric vehicles.

Although there is no conclusive data on Ukraine’s resources since the war started, previous reports state the country has around 20,000 deposits of ore-bearing minerals, including 117 of the 120 most globally used metals and minerals.

These include 80 iron ore deposits with an estimated capacity of 30bn t – around 6% of the world’s total. The reports also show that Ukraine has 40 known deposits of titanium-zirconium ore,
12 of which are exploited.

Gavin Mudd, director of the Critical Minerals Intelligence Centre at the British Geological Survey, said: “Ukraine has important deposits of titanium, rare earths, lithium and graphite – and has also produced gallium and scandium in the recent past.”

He added: “If this agreement paves the way for new supplies of rare earths, that should have a notable impact on the diversification of global mining activities for rare earths – and reduce the dominance of China in the supply of these sought-after materials.”

China currently has a monopoly on mineral supply chains, controlling around 60% of worldwide production and 85% of processing capacity of critical minerals – including lithium nickel, and cobalt, which are needed for green technologies.

The US has a critical minerals strategy aimed at reducing reliance on Chinese imports, including the Minerals Security Partnership, through which it works with countries such as Australia, Japan, South Korea and Canada, as well as the European Union to build an international supply chain.

Agreement for peace

The US and Ukraine have stated that the deal represents a commitment to “lasting peace and prosperity in Ukraine”.

Scott Bessent, the US secretary of the Treasury, said: “This agreement signals clearly to Russia that the Trump Administration is committed to a peace process centred on a free, sovereign and prosperous Ukraine over the long term.”

On the day the deal was signed, the US resumed its aid for Ukraine, starting with US$50m in weapon sales.