The "giant" mineral deal hits a "rock", the US has what Ukraine needs and so does Kiev

The United States and Ukraine have been trying to reach a mega-mineral deal. But there are still sticking points and all eyes are on Washington on February 28, when President Volodymyr Zelensky meets with President Donald Trump.

Rare earth mining in Ukraine's Zhytomyr region. (Source: The New York Times)

On February 25, the Ukrainian government agreed to the terms of a mineral deal with the United States.

Specifically, Ukrainian Deputy Prime Minister Olha Stefanishyna told reporters that the Kiev government had reached a mineral agreement with Washington.

The office of Ukrainian President Volodymyr Zelensky in a statement released later also confirmed the above information.

Welcoming the preliminary agreement, President Zelensky said it was the beginning of a larger deal, as Kiev hoped to receive security guarantees from Washington.

"This is just a beginning, a framework agreement, but it could be a great success. The success will depend on our conversation with President Trump," he affirmed.

Still have problems

The agreement provides for the establishment of a reconstruction investment fund jointly managed by the U.S. and Ukrainian governments . The fund will be managed by both countries on an equal basis.

Ukrainian Prime Minister Denys Shmyhal revealed that the country will transfer half of the revenue from future natural resource projects to the fund, with the money reinvested in more development projects.

The joint contribution of the two countries will be invested in the reconstruction of the country, the economy and security of Ukraine.

In terms of scale, the White House boss revealed that the deal could be worth up to $1,000 billion.

When asked what Ukraine would get in return for the mineral deal, Donald Trump said the US had spent a total of $350 billion in various forms of aid on Kiev.

However, the deal omitted a provision that would have raised $500 billion in mineral revenues.

There is also no clear provision for the US to guarantee Ukraine's security - something Kiev wants in return for sharing the profits from its vast resources.

Mr. Trump said that security guarantees were not part of the agreement.

"We've negotiated quite a bit on our deal on rare earths and a lot of other things. We'll look at future security for Ukraine later," the White House chief said.

The US president said he was "trying to get back the money" in aid provided to Ukraine under the previous administration.

“We do our best to get the best deal possible for both sides,” he said.

Ukraine's mineral wealth has long been eyed by allies, and Kiev has included it in its appeal for support. President Zelensky wants security guarantees as part of any deal with Washington.

Some of the mineral deposits are already located in Russian-occupied areas, so Mr Zelensky argues that the reason the West should support Ukraine is to prevent these strategically important resources from falling into the hands of the Kremlin.

Nataliya Katser-Buchkovska, co-founder of the Ukrainian Sustainable Investment Fund, said an agreement cannot be implemented without security guarantees.

Why does the US need Ukrainian minerals?

Materials such as graphite, lithium, uranium and 17 chemical elements known as rare earths are critical to economic growth and national security.

Rare earths are essential for the production of electronics, clean energy technologies, including wind turbines, energy grids, electric vehicles and some weapons systems.

Meanwhile, the US relies on imports of essential minerals, much of which come from China – a country that has long dominated the market.

According to the Center for Strategic and International Studies (CSIS), the country of one billion people is responsible for processing nearly 90% of the world's rare earth minerals. In addition, the country is also the world's largest producer of graphite and titanium and a major processor of lithium.

Ukrainian President Volodymyr Zelensky and US President Donald Trump. (Source: Spiegel)

Experts have long warned that relying on China for strategic materials is risky, but the latest trade tensions between Washington and Beijing have prompted the US to look for alternative suppliers.

Of course, the US is not the only country eyeing Ukraine's resources.

In 2021, the European Union (EU) signed a memorandum of understanding with Ukraine, outlining future investment opportunities in the mining sector.

A similar document was prepared under the Biden administration last year, which said the country would promote investment opportunities in Kiev’s mining projects for American companies.

Ukraine needs America too

Ukraine does not have significant global reserves of rare earth minerals, but it does have some of the world's largest deposits of graphite, lithium, titanium, beryllium and uranium, all of which are classified as critical minerals by the US.

Despite possessing such huge "assets", the Eastern European country does not develop this industry.

With the enormous pressure from the conflict with Russia, Kiev will find it difficult to exploit these resources without foreign investment. And American businesses could be a potential target.

So when the mineral deal is signed, both sides benefit - at least in terms of mineral exploitation.

Ms. Katser-Buchkovska said that most of Ukraine's projects are still in the exploration phase, and no large-scale treatment facilities have been put into operation yet.

“Mining rare earth minerals will be extremely expensive, requiring years and billions of dollars of upfront investment to develop infrastructure and train the workforce,” she stressed.

In addition, Ukraine's resource extraction sector remains underdeveloped due to outdated infrastructure, damage related to the conflict with Russia and lack of investment."

Officials expect the “mega-deal” between the US and Ukraine to be signed at the White House on February 28, when Mr. Zelensky arrives in Washington, paving the way for more detailed negotiations on military aid and security guarantees for Ukraine.

If this happens, there appears to be no further sticking point between the two sides in this deal.

Source: https://baoquocte.vn/thoa-thuan-sieu-to-khong-lo-ve-khoang-san-vap-da-tang-my-co-thu-ukraine-can-va-kiev-cung-the-305837.html