Highlights

• U.S. and Ukraine create a joint investment fund for mineral resources, focusing on critical minerals without tying revenues to military aid repayment.
• Significant challenges remain, including lack of geological data, war-damaged infrastructure, and security uncertainties that may deter private sector investment.
• Trump's minerals-first foreign policy aims to secure supply chains but raises questions about long-term geopolitical strategy and Ukraine's actual benefit.

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Gracelin Baskaran and Meredith Schwartz, consultants with CSIS, summarized (opens in a new tab) the deal between the United States and Ukraine (opens in a new tab). The groundbreaking minerals agreement sets the stage for joint investment in Ukraine’s critical resources. This move marks a pivotal shift in U.S. mineral security strategy under President Donald Trump, yet it leaves more questions than answers. The deal aims to establish a reconstruction investment fund rather than forcing Ukraine to use minerals as repayment for U.S. military aid. However, without security guarantees and reliable geological data, the viability of long-term mineral extraction remains in question.

The authors are experts in the field of critical minerals. Some key takeaways from their recent piece include the key point that the outcome of the negotiation is a fund, not a mine. Unlike initial proposals tying mineral revenues to U.S. debt repayment, the agreement, as Rare Earth Exchanges has reported, creates a joint investment fund, with Ukraine contributing 50% of future revenue from newly monetized natural resource assets. Yet, existing revenue sources, like Naftogaz, are excluded, meaning profitability depends entirely on the success of untapped assets.

The two respected authors suggest the private sector remains skeptical of the deal. While the deal aims to spur private sector investment, challenges loom. Mining takes an average of 18 years from discovery to production, requiring upwards of $1 billion per project. Ukraine lacks modern geological mapping, making the commercial viability of its mineral reserves uncertain. Without confirmed data, Western companies are unlikely to take the risk.

Of course, then, there is the war-torn infrastructure in Ukraine. The nation’s mining potential is constrained by energy devastation. Nearly half of the country’s power grid has been damaged by war, and mining is one of the most energy-intensive industries. Large-scale mineral extraction remains a distant dream without substantial investment in power restoration.  The security situation cannot be ignored.  The absence of security assurances in the deal raises red flags for investors. Mining operations often require decades-long commitments, and Ukraine’s political and military instability makes it a high-risk environment. Trump’s transactional approach to diplomacy—downplaying military support while cutting minerals deals—leaves Ukraine vulnerable and unappealing to serious investment.

Finally, Mrs. Baskaran and Schwartz point out that the agreement cements critical minerals as central to Trump’s global strategy. Beyond Ukraine, Trump has eyed mineral access beyond Ukraine in Greenland, Canada, and Russia. However, without solid data and better incentives for Western firms, China and Russia’s state-backed mining operations will remain dominant in global supply chains.

Rare Earth Exchanges Take

The authors are top consultants in the field of critical minerals. Their analysis avoids addressing the deal’s broader geopolitical consequences. Trump’s pivot from Biden’s strong-arm isolation of Russia toward diplomatic overtures with Moscow raises concerns about NATO’s long-term security. The report also sidesteps questions about how China’s dominance in critical minerals might undercut U.S. ambitions.  As Rare Earth Exchanges has reported, without an industrial policy, the United States will struggle for supply chain resilience, at least in the short and intermediate run.  Moreover, the authors don’t scrutinize whether Ukraine truly benefits from this deal—or simply mortgaging its future while lacking real security commitments.  The American president certainly unexpectedly came to Ukraine, given it was they who were invaded by Russia, not the other way around.

Some Food for Thought

The U.S.-Ukraine minerals deal is a high-stakes experiment in transactional diplomacy in the second era of Trumpian America. While it signals an American commitment to securing mineral supply chains, the obstacles—lack of geological data, crumbling infrastructure, and deep security risks—cast doubt on its long-term success. Rare Earth Exchanges suggests that, at least in part, this was a marketing effort as Trump committed to ending the war. With this deal, he can claim that plus get secured good for the American people for sending billions of dollars over to Ukraine.

But without clear safeguards and financial incentives, private sector engagement may stall, leaving Ukraine with another half-measure agreement in a war-ravaged economy. Meanwhile, Trump’s minerals-first foreign policy raises the question: Is the U.S. under Donald investing in Ukraine’s future—or just mining for leverage?