Economy

Mineral Resources of Ukraine: US insists on control, Kyiv demands guarantees

Negotiations on the mineral’s agreement are closed, and Ukraine is waiting for the US to sign it. This was stated on March 14 on the sidelines of the Forbes Exporters Summit by Deputy Prime Minister for European and Euro-Atlantic Integration Olha Stefanishyna, Komersant ukrainskyi reports.

“The agreement is ready, there are no changes to the text. The negotiations are closed. The American side has not decided when and under what conditions they want to sign it at this stage. Ukraine is ready to sign it at any time,” she said.

Ukraine-U.S. Mining Agreement: Prospects, Challenges and Geopolitical Context

Ukraine and the United States have been actively negotiating an agreement on the development of strategically important mineral resources, which could play a key role in both the recovery of the Ukrainian economy and the strengthening of American supply chains. Ukraine has rich deposits of lithium, titanium, and rare earth metals, which are particularly in demand in industries such as battery manufacturing, aerospace, and defense.

Economic experts note that the signing of the agreement between the two countries could lead to large-scale investments in Ukraine’s mining sector.

Ukraine and the United States discussed the creation of a Recovery Investment Fund, to which Ukraine will transfer 50% of revenues from future mining. This fund is intended to attract private and public investment in the development of Ukrainian infrastructure and industry.

However, during the negotiations, the American and Ukrainian sides encountered difficulties. They were related to the following:

• Control over resources. The US seeks more guarantees of influence over the development of deposits, while Ukraine wants to maintain national control over its natural resources.
• Lack of clear security guarantees. Ukraine expects the US to include commitments to protect critical infrastructure and direct military support in the agreement.
• Political instability. Negotiations were complicated by disagreements between the White House and Congress, where Republicans and Democrats have different views on the prospects for cooperation with Ukraine.

The interest of American companies

Despite the unresolved nature of the deal, American corporations are already showing interest in Ukrainian resources.

One of the main potential investors is TechMet, a company backed by the US government. TechMet plans to invest in lithium mining at the Vydobutok deposit in central Ukraine. Lithium is a key component for the production of batteries used in electric vehicles, smartphones, and military equipment. However, the project’s implementation is pending the signing of a formal agreement between the two governments.

Tesla, General Electric, and Lockheed Martin are also interested in Ukrainian resources, but they are not yet ready to invest due to political and economic risks.

Key challenges and obstacles

Although the deal looks promising, there are several serious challenges to its implementation:

1. Some of the fields are located in the temporarily occupied territories.

The mineral-rich eastern regions of Ukraine are temporarily controlled by Russia. Development of these resources is impossible until the war ends.

2. Infrastructure problems. The war has destroyed most of Ukraine’s logistics network. Even if the United States agrees to the deal, investors will need several years to rebuild the infrastructure for mining and transportation of minerals.

3. High processing costs. Many rare earth elements are difficult to process without significant investment. Ukraine does not have enough capacity for deep processing of minerals, which increases dependence on foreign technologies.

4. Political uncertainty in the United States. Donald Trump sees the deal as a tool to put pressure on Ukraine, trying to get concessions on other issues. Congress has not yet agreed on a final position on investments in the Ukrainian economy.

The future of the agreement: possible scenarios

Experts identify several scenarios for the future:

1. Full signing of the agreement in 2025. Ukraine and the US find a compromise and sign the agreement. The country receives the first investments and begins mining. Ukraine gets a stable source of income and access to technology.

2. Partial launch of the project. The United States agrees to develop only part of the fields, leaving key issues open. Ukraine receives limited investment but faces challenges due to uncertainty over security.

3. Freezing the deal. The US does not sign the agreement, using it as a lever of pressure on Ukraine. Investors refuse to make large investments because of uncertainty.

What other countries can sign mineral agreements with the US?

The United States is actively developing cooperation with various countries to ensure a stable supply of critical minerals needed for technology, defense, and energy. Washington is seeking to reduce its dependence on China, which currently dominates the world’s rare earths mining and processing.

Countries with which the United States is negotiating or has already concluded mineral agreements:

1. Democratic Republic of Congo (DRC). The US is discussing an agreement with Congo that would allow US companies to gain exclusive access to cobalt, copper, and lithium deposits. In return, the United States may provide military support to the DRC in its fight against internal conflicts.

2. Vietnam. Recently, Vietnamese and American companies signed agreements in the energy and mining sector worth $4.15 billion. The agreement includes mineral processing projects and cooperation with companies such as Masan Group and U.S. International Development Finance Corporation.

3. Indonesia. In November 2023, the United States and Indonesia agreed to develop a “Critical Minerals Action Plan” that could develop into a full-fledged trade agreement. Indonesia is rich in nickel and other important metals needed for battery production.

4. Australia. The United States is actively interested in Australian lithium projects, especially those involving companies that resist Chinese influence. One such project is the AVZ Minerals mining project.

5. Japan. The United States already has an existing agreement with Japan on critical minerals. The document aims to jointly develop the extraction and processing of rare earth metals.

6. Chile and Peru. These countries are the largest exporters of copper and lithium. American companies are already actively investing in mining projects, especially in Peru.

Why does the US enter into mineral agreements?

1. Reducing dependence on China.

China controls more than 60% of the global rare earths processing market. Washington wants to diversify supplies to avoid the risk of disruptions.

2. Supporting the American industry.

The United States is increasing production of electric vehicles, defense equipment, and semiconductors, which require rare earth elements. Without reliable suppliers, these industries will be vulnerable.

3. Geopolitical influence.

The conclusion of such agreements strengthens relations with partners around the world.

The US offers not only investments but also technological and military support in exchange for access to resources.