The Trump administration is making significant strides toward a deal granting the United States access to valuable mineral rights in Ukraine. This comes after tensions between the two nations had flared, with Trump pressuring Ukraine for a more favorable agreement. The deal has the potential to bring up to $500 billion to the U.S. economy.
After an initial rejection by Ukrainian President Volodymyr Zelenskyy, President Trump escalated the pressure by criticizing Zelenskyy and suggesting he might side with Russia in the ongoing war. The disagreement over minerals sparked a wider crisis in U.S.-Ukraine relations this week, with Trump denouncing Zelenskyy as a “dictator” and accusing him of escalating the conflict with Russia. Meanwhile, Zelenskyy said that Trump is “surrounded by disinformation”.
Earlier this week, Zelenskyy was excluded from talks between top Russian and American officials who met in Saudi Arabia to discuss the possibility of ending the conflict for the first time since the full-scale invasion of Ukraine in February 2022.
Negotiations: a ‘Make or Break’ moment
The Trump administration has reportedly sent Ukraine an “improved” draft for the mineral deal after Zelenskyy rejected the initial offer. U.S. officials have described it as a “make or break” situation for Ukraine, emphasizing that the decision now rests with Zelensky, and both parties have expressed concern that rejecting the offer could further escalate the U.S.-Ukraine crisis.
White House national security adviser Mike Waltz indicated that the U.S. is prepared to move forward regardless of Zelensky’s stance. “President Zelenskyy is going to sign that deal and you will see it in the very short term,” White House National Security Adviser Mike Waltz said on Friday at the Conservative Political Action Conference (CPAC).
At the White House, Trump emphasized that a deal was on the horizon. “So we’re signing an agreement, hopefully in the next fairly short period of time,” he stated confidently.
President Zelenskyy also seemed to soften his stance, acknowledging the importance of the agreement. “This agreement can add value to our relations — what matters most is getting the details right to ensure it truly works,” Zelenskyy said in a social media post on Friday.
Zelensky initially rejected the offer, stating that the contract proposed the U.S. either own or receive revenue from 50% of Ukraine’s rare earth minerals and other natural resource sectors. Sources revealed that the document specified the compensation was for past U.S. aid, not future assistance. Speaking on Fox News, White House national security adviser Mike Waltz called on Ukraine to stop “bad-mouthing” Trump, emphasizing the significant support the U.S. had provided to the country. “It’s unacceptable. They need to tone it down, take a hard look, and sign that deal,” he said.
What are Critical Minerals?
Critical minerals are raw materials essential for the production of high-tech products, particularly those related to the green energy transition. They are also crucial for consumer electronics, artificial intelligence infrastructure, and defense applications. As the world pushes toward renewable energy and electrification, minerals such as cobalt, copper, lithium, and nickel are becoming increasingly important. These minerals are used in everything from electric vehicle batteries to wind turbines, mobile phones, and fighter aircraft.
Which Minerals are Regarded as Critical?
The term critical minerals is often defined differently by each country, based on its domestic and geopolitical objectives. In 2022, the U.S. Geological Survey (USGS) published a list of 50 minerals, from aluminum to zirconium, that it considered vital for national security, economic stability, and renewable energy development. This includes minerals like cobalt, lithium, neodymium, and graphite, which are central to the production of cutting-edge technologies. Ukraine is home to substantial reserves of several minerals on this critical list, making it a key player in the global mineral supply chain.
What Mineral Resources does Ukraine have?
Ukraine holds significant reserves of rare earth minerals, making it a vital player in the global supply of critical materials. The country is estimated to contain about 5% of the world’s mineral resources, despite covering only 0.4% of the globe’s surface. Ukraine’s deposits include 22 of the 34 minerals identified by the European Union as critical, including cobalt, nickel, lithium, and graphite.
Ukraine is particularly known for its vast graphite reserves, which make up 20% of the global supply. Additionally, it is a key source of lithium, vital for batteries and ceramics, and neodymium, used in wind turbines and electric vehicles. The country also holds one of Europe’s largest confirmed lithium reserves, estimated at 500,000 metric tons. These resources are crucial for the green energy transition and for various technological applications, making Ukraine an important mineral-rich nation.
Why Trump wants Ukraine’s Critical Minerals
The urgency behind Trump’s interest in Ukraine’s minerals is clear. The U.S. is racing against China to secure access to critical minerals vital for the green energy transition and advanced technology development. China currently dominates the global processing of these minerals, refining 50-70% of global lithium and cobalt, and controlling nearly 90% of rare earth element (REE) reserves.
During his tenure, Trump initiated a trade war with China, imposing heavy tariffs on Chinese goods. As the U.S. looks to reduce its reliance on China’s processing and refining capabilities, securing mineral rights in Ukraine presents an opportunity to bypass China’s control over the market.
If the U.S. fails to secure these resources, rival powers will fill the void, undermining America’s competitive advantage in the global economy. While Ukraine’s mineral wealth offers a potential economic boost, the geopolitical stakes are even higher, as securing these resources is crucial for maintaining U.S. technological and economic leadership in the years to come.