All about the US-Ukraine agreement on Ukrainian minerals, reconstruction

Ukrainian Prime Minister Denys Shmyhal described the deal as “truly a good, equal and beneficial international agreement on joint investments in the development and recovery of Ukraine”.

What do we know about the agreement?

1. 01

   A 50-50 partnership

   Ukraine Economy Minister Yulia Svyrydenko, who signed the agreement with US Treasury Secretary Scott Bessent, described it in a social media post as a 50-50, “equal partnership”. Thus, the fund would be “jointly managed” by the US and Ukraine, with neither side holding a dominant vote.

   Both sides would select the projects jointly, and all profits generated by the fund would be reinvested in Ukraine for the first decade.

2. 02

   Ukrainian ownership, US access

   According to the Economy Minister, Ukraine will retain full control over subsoil, infrastructure and natural resources, following the country’s laws. Ukraine will also determine what can be extracted and from where, she wrote.

   Crucially for Ukraine, the accord ensures that national enterprises like the oil and gas producer Ukrnafta and nuclear power company Energoatom will remain under Ukrainian control, according to Svyrydenko.

   She also noted that the US may offer additional support beyond its monetary contribution to the fund.

3. 03

   Expanding the ambit beyond minerals

   In addition to Ukraine’s minerals, the agreement allows for new oil and gas projects and associated infrastructure. (More about this below)

   According to Svyrydenko, the deal would apply to new licenses under the deal and would not draw on revenues from existing projects. Also, 50% of such revenue would be redirected towards the fund.

4. 04

   No debt obligation from Ukraine

   Notably, the agreement will include no debt obligation to the US, which Trump viewed as a bone of contention in the past and used to hold out on the agreement. He has previously claimed that the US paid $350 billion in assistance to Ukraine for the war, which he repeated during the ill-fated Oval Office exchange with Ukrainian President Volodymyr Zelenskyy in late February.

   In a separate social media statement, Shmyhal wrote, “Any assistance provided to Ukraine prior to its signing is not subject to this agreement.” However, new military aid from the US would come under the fund’s purview.

5. 05

   Currently, no security guarantees from the US

   The New York Times reported that the agreement does not include any explicit guarantee of future US assistance, allowing it to walk away from the table at any time. However, the deal itself may serve to build goodwill with the American president following the February debacle, and give him an economic stake in the ongoing war.

6. 06

   …but tougher language against Russia

   In its statement, the US Treasury Department referred to “Russia’s full-scale invasion.” Bessent said, “No state or person who financed or supplied the Russian war machine will be allowed to benefit from the reconstruction of Ukraine.”

   Trump has proven amenable to the Kremlin, and earlier this month even outlined a peace plan that aligned with Russia’s positions in the war,  including asking Ukraine to cede control of Crimea, occupied by Russia since 2014.

What minerals does Ukraine hold?

Ukraine is home to two kinds of minerals, which are vital in manufacturing high-tech products to enable the green-energy transition, and are also used in sophisticated weapons and consumer goods. These minerals are rare to find and difficult to mine, making them extremely valuable: A 2023 estimate by the International Energy Agency (IEA) attributed the energy transition minerals market to be $320 billion in 2022, double its value five years earlier.

These minerals may be:

• Rare earth elements, of which 17 types exist, including 15 Lanthanides (atomic numbers 57 — which is Lanthanum — to 71 in the periodic table), Scandium (atomic number 21) and Yttrium (39).
• Critical minerals, which may be country-specific, but are broadly identified for their value in economic development and national security, and their lack of availability. India identified 30 critical minerals in 2023. “Ukraine holds 22 of the 50 strategic materials identified by the US as critical, and 25 out of the 34 recognised by the EU as critically important. Particularly, Ukraine holds very competitive positions in five key ones: graphite, lithium, titanium, beryllium and uranium,” according to a report by Ukraine’s Ministry of Environmental Protection and Natural Resources and the Ukrainian Geological Survey.

Source: Ukrainian Geological Survey and Ministry of Environmental Protection and Natural Resources of Ukraine

According to NYT reporting, the deal was proposed by Zelenskyy, likely to force Trump’s hand in ending the war by granting him a financial interest. The current agreement, according to the report, is viewed by Ukraine’s supporters as a means for the US president to see the country as more than a ‘money pit’, and an impediment to renewed US-Russia relations.