So near, yet so far. Just when we thought that an end to Russia’s war with Ukraine was in sight – incorporating a deal between the US and Ukraine on developing and extracting critical minerals – recent Oval Office events threw a spanner in the works.
The rather unseemly spectacle of President Donald Trump, Vice-President JD Vance and Ukrainian President Volodymyr Zelenskyy exchanging harsh words (and harsher glares) for several minutes wasn’t exactly helpful, and could have set back a combined peace and economic deal for weeks – if not months.
However, the US’ desire to sign a critical minerals deal with Ukraine – which sits on one of Europe’s largest deposits, worth an estimated $12trn (Hrv498.44trn) – is still very much on the cards, with Trump now pushing hard for a deal.
According to a 2024 report from Reuters, citing Ukrainian data, the war-ravaged country has deposits of 22 of the 34 minerals identified as critical by the EU, as well as 500,000 tonnes of lithium and one-fifth of the world’s graphite, almost 40% of which is now under Russian occupation.
However, while “Ukraine possesses significant deposits of minerals such as lithium, graphite, manganese and titanium, no stand-alone rare earth deposits of commercial viability have been identified to date,” says Pini Althaus, critical minerals expert and CEO of Cove Capital, an investment firm focused on mining, renewable energy and clean technology.
Mining companies have very limited data on whether Ukraine’s rare earth elements (REEs) are commercially viable to mine; current mapping and estimates are up to 60 years old and were carried out by previous Soviet authorities. This is likely to worry mining companies thinking of working in Ukraine – when the deal is eventually signed – which will need specific data to guide investment decisions.
Althaus adds that many of these deposits “remain underexplored and underdeveloped, and this undertaking is extremely costly and requires refining and processing technology.
“But the proposed deal between the US and Ukraine seeks to unlock this potential, offering the US an opportunity to diversify its critical minerals supply chain.”
However, even with a peace deal in place, mining companies may be reluctant to make substantial long-term investments in the former Soviet republic due to ongoing security risks. The US – and possibly NATO – would likely have to provide some form of ongoing security system (short of boots on the ground) given the threat of the conflict reigniting in just a few years.
Bump in the road
Trump views Ukraine’s critical minerals – at least in part – as payment for the billions of dollars the US has given to (and potentially will continue to provide) Ukraine in financial aid and battlefield weapons over the past three years, which has effectively allowed it to put up a fight against the invading Russia forces.
Speaking to a US media outlet, US Treasury Secretary Scott Bessent said: “Trump’s idea for this economic arrangement was to further intertwine the American people and Ukrainian people and show no daylight.”
However, Zelenskyy “came into the Oval Office and tried to relitigate in front of the world the deal,” he said, which prompted Trump and Vance to attack the Ukrainian leader in a heated exchange.
Just a day or two later Zelenskyy released a statement saying it was “time to make things right” and expressed his regret over the spat, while promising that Ukraine was ready to work with the US to end the war with Russia – and eventually sign the minerals deal, albeit with associated security guarantees.
The deal could be of greater benefit to Ukraine than to the US, says Althaus, “given Ukraine lacks the funding and technology to undertake this endeavour without the support and financial assistance of the US”. Plus, the US has other near-term options to acquire critical minerals, “such as Kazakhstan and Uzbekistan”.
Why the US needs Ukraine
Several US news sources, citing leaked documents, have said the US is asking for 50% of the minerals’ revenues when they are eventually developed, a framework deal that resulted from a meeting last September between Trump and Zelenskyy, with the Ukrainian leader ready to give the US a direct stake in the country’s critical minerals in exchange for continued weapon deliveries.
In 2022, the US Geological Survey classified 50 minerals as critical to both the economy (numerous energy products, for example) and national security (various pieces of military equipment). The minerals in question include arsenic, antimony, barite, bismuth, lithium, magnesium, various rare earths and tungsten.
The simple fact of the matter is that the US does not have sufficient critical minerals reserves to meet its own needs, both industrial and military. Added to this is the problem that it can take more than a decade to bring new domestic mines into production, meaning the nation must rely on imports, no matter how small, for the foreseeable future.
Furthermore, its Asian rival China fully understands the leverage it has in this situation.
Most of the world’s processing capacity for critical minerals is still in China, a nation with whom Trump has just started a tariff war that threatens to disrupt the supply of numerous products and raw materials between the economic giants.
“Currently, China controls 60% of worldwide production and 85% of processing capacity of critical minerals, and 90% of global REEs, and this poses significant national security and economic development risks to the US,” says Althaus.
“Recent export bans by China of key critical minerals to the US used in advanced manufacturing, national security and renewable energy further emphasise the significance and urgency of securing these minerals from allied and friendly countries, while also bolstering the US domestic critical minerals supply chain,” he adds.
Martina Raveni, strategic intelligence analyst at GlobalData, says that geographic monopolies “worsen supply risks and are further exacerbated by geopolitical tensions”.
For several years, the US has been keen to diversify away from its dependence on China, using a combination of alternative international sources, better recycling and increased domestic production.
Following the Inflation Reduction Act (IRA), passed into US law in 2022 under then-President Joe Biden, the US has been pressuring Europe to join it in pulling away from Chinese supplies of critical minerals, with a key aim of the act being to secure critical mineral supplies independent of the Asian powerhouse.
The expansion and development of the Thacker Pass lithium mine in Nevada is part of this process, with the facility projected to provide up to a quarter of global lithium demand once operational. Construction on the mine began in early 2023, and it is expected to be operational by 2028.
The environmental importance of critical minerals
Securing enough critical minerals to support a nationwide low-carbon transition also poses a serious challenge for the US’ clean economy, for which elements such as lithium, graphite, rare earths and cobalt are essential.
The US is reliant on large imports for virtually all these minerals, and the International Energy Agency recently stated that critical minerals such as these are essential components of many energy technologies and products such as wind turbines and electric vehicles.
Currently, the US does not mine significant quantities of most critical minerals, with the nation totally reliant on imports for 12 of them, including graphite, which is a crucial part of renewable energy storage thanks to its electrical conductivity.
Even though recycling will generate more material over the next few decades, in the short term there will not be enough in circulation to make recycling a feasible approach. Hence, new sources need to be found, developed and extracted.
During his first term Trump tried to address this problem and reduce US vulnerability to critical minerals disruptions through his 2017 Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals.
Among its proposals was the requirement for the “Federal Government to reduce the Nation’s vulnerability to disruptions in the supply of critical minerals… for the benefit of the American people and in a safe and environmentally responsible manner”.
There was also a need to identify new sources of critical minerals; increase activity at all levels of the supply chain; ensure that “our miners and producers have electronic access to the most advanced topographic, geologic and geophysical data within US territory”; and streamline leasing and permitting processes to “expedite exploration, production, processing, reprocessing, recycling and domestic refining of critical minerals”.
This document recognises minerals as critical to US interests, especially in the fields of security and economic prosperity, but was only the first step in a process that helped the US deal with its critical minerals issue. The mantel was really taken up by the IRA.
That legislation, coupled with the Bipartisan Infrastructure Law, signed into law by Biden in November 2021, built on the work started by Trump by offering funding for domestic mining, processing and recycling initiatives.
So, will any proposed deal help the US secure access to essential resources? In the longer term, yes. However, what is more likely is that Trump sees the resolution of the war as a fantastic opportunity to diversify resource access in the longer term. With the negotiations ongoing, and a ceasefire seemingly close, Trump’s tactics appear to be working.
