Highlights
- A proposed U.S.-Ukraine mineral agreement would have given the U.S. 50% control of Ukraine’s resource revenues and infrastructure.
- This agreement effectively created an exploitative economic arrangement.
- Ukraine’s mineral wealth is estimated between $11.5-$26 trillion.
- The actual extractable value and processing capabilities remain uncertain.
- Zelensky ultimately walked away from the deal to protect Ukraine’s national sovereignty.
- The agreement positioned Ukraine as an economic vassal rather than an equal partner.
Was the Ukraine’s rare earth gamble worth it?
The recent collapse of a proposed U.S.-Ukraine mineral deal exposes a harsh reality: Kyiv was on the verge of economic colonization, not partnership according to many critics. As reports surfaced that Ukrainian President Volodymyr Zelensky refused to sign an agreement granting the U.S. extensive control over Ukraine’s mineral wealth, a deeper look at the deal suggests it was an unsustainable and exploitative arrangement, at least from a Ukrainian point of view.
First the Promise vs. Reality of Ukraine Minerals
Ukraine has long touted its vast deposits of titanium, lithium, uranium, and rare earth elements, most of which remain untapped due to decades of underinvestment. Despite its claims of having some of the world’s largest titanium reserves—critical for aerospace and defense—only 10% of its proven deposits are currently being developed. Successive geopolitical crises, from the 2014 annexation of Crimea to Russia’s full-scale invasion in 2022, have continuously disrupted plans to attract foreign investment in resource extraction.
While Kyiv has worked to court Western investors, particularly American companies, the actual scale of its mineral wealth remains uncertain. Some estimates place Ukraine’s total mineral reserves at $11.5 trillion, while others balloon that figure to an implausible $26 trillion. The problem? Much of these numbers stem from outdated Soviet-era assessments, and the U.S. Geological Survey does not even recognize Ukraine as a significant rare earth player.
A Deal Too Good for the U.S., Too Bad for Ukraine?
At face value, the agreement seemed like a strategic move to ensure Ukraine’s economic stability and secure U.S. backing. In reality, it was a one-sided arrangement that effectively handed the U.S. control over Ukraine’s key economic assets. According to a leaked draft, the U.S. would receive 50% of all revenue generated from mineral extraction, as well as 50% of all new licenses granted to third parties, until it had recouped $500 billion—nearly three times what the U.S. has spent on Ukrainian aid so far.
Notably, the agreement didn’t just cover metals but also included Ukraine’s oil, gas, and port infrastructure. Also the deal dictated that any disputes would be resolved under New York law, with Ukraine waiving its sovereign immunity in financial matters. This meant that Ukraine would have virtually no leverage to renegotiate terms or challenge U.S. control over its resources.
The China Factor and the Rare Earth Mirage
The driving force behind U.S. interest in Ukrainian minerals is its reliance on China for rare earth elements. China controls 60% of global rare earth mining and nearly anywhere from 80% to 90% of processing, creating a national security concern for Washington Rare Earth Exchanges was founded to chronicle.
Trump, keen on reducing dependence on Beijing, saw Ukraine as a potential alternative supplier. However, even if Ukraine were to fully develop its mining sector, it would still take decades to challenge China’s dominance, due to “that processing and production thing.”
Moreover, the economic feasibility of Ukraine’s rare earth extraction remains highly questionable. Contrary to popular belief, rare earth elements are not geologically rare—what makes them valuable is their processing, which is environmentally hazardous and costly. The global rare earth market is worth only about $15 billion annually, a fraction of oil or copper. For the U.S. to recoup $500 billion, it would need to control Ukrainian mineral extraction for over 150 years—a nearly impossible proposition.
Strategic Gamble or Economic Colonization?
Ukraine’s decision to walk away from the deal signals that Zelensky recognized its dangers. While American investment could bolster Ukraine’s mining sector, the Ukrainian head suggested that granting the U.S. near-total control over its natural resources in exchange for vague security guarantees was a reckless wager. The agreement, as written, positioned Ukraine not as an equal partner but as an economic vassal, basically.
Zelensky’s move may have cost Ukraine short-term U.S. favor, and that may bite the country, but in Europe, we are hearing chatter that, in the long run, it was a necessary step to preserve national sovereignty. The rare earth narrative may have been a strategic ploy to attract U.S. interest, but the reality is that no amount of mineral wealth is worth sacrificing Ukraine’s independence. The failed deal serves as a stark warning: in geopolitics, resources are power, and power is not given away lightly. Unless the whole thing was some act, part of an Art of the Deal unfolding dynamic—it could be, but it is unlikely. Regardless, I wouldn’t be surprised if Zelensky and Trump get back together relatively soon.
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