U.S. and Ukraine Set to Finalize High-Stakes Critical Minerals Deal-But Does It Actually Matter?

Highlights

• The US and Ukraine are finalizing a landmark agreement for access to critical minerals.
• The agreement aims at reducing dependence on China.
• Despite the deal, China still controls over 85% of rare earth processing, refining, and magnet manufacturing.
• The agreement is significant but may be more symbolic without substantial US investment in domestic processing capabilities.

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The United States and Ukraine are on the verge of finalizing a landmark agreement granting the U.S. access to Ukraine’s critical minerals and rare earth elements, a move touted as a major step in countering reliance on China. President Volodymyr Zelenskyy is expected to visit Washington on Friday to sign the deal alongside President Donald Trump, marking what appears to be a geopolitical and economic win for the U.S. But is it really a win, or is it more a symbolic gesture and possibly hollow bragging point, based on the actual realities of the rare earth element supply chain worldwide?

Deal Terms–Strategic Resources for Continued Support

According to Ukrainian officials, negotiations are 99.9% complete, though Trump has not formally confirmed the U.S. commitment, saying finalization will happen only once both presidents sign the agreement. “It’s OK with me if he’d like to,” Trump said about Zelenskyy’s planned visit, calling the deal “a very big deal.” Later, he stated, “We’ve pretty much negotiated our deal on raw earth.”

Trump has insisted that access to Ukraine’s rare earth minerals is necessary as a form of “security” to justify continued U.S. investment in the country. However, while Trump claims U.S. aid to Ukraine has totaled $350 billion, official U.S. government figures place the actual amount at $174 billion, highlighting an ongoing dispute over the true scale of American support.  Other more conservative geological surveys suggest in the hundreds of millions in the short to intermediate run based on a number of constraints.

Mainstream Media: Why This Deal Matters

Will Gretsky, ABC News reports that the Ukraine holds 5% of the world’s critical raw materials, including rare earth elements essential for defense, electronics, and clean energy. The U.S. seeks direct access to these resources to reduce its dependence on China, which currently dominates the global rare earth supply chain.

What are the geopolitical and economic implications? The American news media further elaborated this deal deepens U.S.-Ukraine economic ties, providing Ukraine with much-needed foreign investment in exchange for resource security.  Finally ABC News reports It strengthens U.S. energy independence and military readiness, securing minerals vital for EVs, fighter jets, and high-tech industries.

So Rare Earth Exchanges poses some questions for readers to ponder.   Does the deal offer America a counter to Russian and Chinese influence? What about the Russian held territory where a good proportion of the resources are located. Russia occupies significant portions of Ukraine’s mineral-rich regions, raising concerns about whether Kyiv can even deliver on its promised supply.

Does this agreement align with Western efforts to break free from China’s mineral supply dominance, following China’s recent export restrictions on elements like gallium and germanium?  Rare Earth Exchanges is not so certain.

Or another question is raised below.

Why might this deal not matter? At least in the short term?

Despite its geopolitical weight, this agreement does little to address the fundamental problem frankly.  China’s dominance over rare earth processing, refining, and magnet production represents a steep mountain.

The U.S. gaining access to raw Ukrainian minerals does not immediately translate into a functional, independent supply chain because:

• China Still Controls Processing & Refining: Extracting rare earths is only part of the equation—China processes over 85% of the world’s rare earth elements. Until the U.S. develops its own refining capacity, it will still rely on China to convert raw materials into usable products.
• No Immediate Impact on Supply Chains: Even if Ukraine delivers raw materials, it could take years before those resources translate into domestic U.S. production.
• Magnet Manufacturing Still Dominated by China: The final step in the supply chain—turning refined rare earths into magnets for EVs, wind turbines, and defense applications—remains overwhelmingly controlled by China. Without magnet manufacturing, U.S. independence in rare earths remains an illusion.
• Risk of Disruption in War-Torn Ukraine: Ukraine’s ability to mine and export rare earths is far from guaranteed, especially with Russia controlling large portions of key mineral-rich regions.

Plus the U.S. is nowhere near the level of industrial policy needed to take on this challenge.

Unanswered Questions & Challenges

While the agreement appears imminent, several major uncertainties remain:

• Will Trump demand additional concessions? His transactional approach suggests the deal could still face last-minute changes.
• Can Ukraine actually deliver? Russia’s territorial control means some key resources may not even be accessible to Kyiv.
• What is the U.S. plan beyond raw materials? Without domestic processing and magnet production, this deal risks being symbolic rather than transformative. The lack of a critical mineral/rare earth industrial policy raises significant challenges.

A Pivotal but Incomplete Step in U.S.-Ukraine Relations

While this agreement is a significant geopolitical move, it does not immediately change China’s grip on the rare earth industry, not in the short or intermediate term, and possibly not even in the long term.  Until the U.S. develops its own refining and magnet manufacturing capabilities, China will remain the dominant player in the global supply chain.

Zelenskyy and Trump may sign the deal Friday, but without long-term investment in domestic processing and supply chain independence, this agreement—though valuable—might not be the game-changer it appears to be.