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Minerals for military aid? Kyiv's proposed Ukraine-U.S. exchange deal

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Ukraine's President Volodymyr Zelenskyy and his U.S. counterpart Donald Trump: Each has something the other wants. /Shannon Stapleton/Reuters
Ukraine's President Volodymyr Zelenskyy and his U.S. counterpart Donald Trump: Each has something the other wants. /Shannon Stapleton/Reuters

Ukraine's President Volodymyr Zelenskyy and his U.S. counterpart Donald Trump: Each has something the other wants. /Shannon Stapleton/Reuters

Ukraine has offered to strike a deal with U.S. President Donald Trump for continued American military aid in exchange for developing Ukraine's mineral industry, which could provide a valuable source of the rare earth elements that are essential for many kinds of technology.

Trump said earlier in February that he wanted such a deal, and it was initially proposed last fall by Ukrainian President Volodymyr Zelenskyy as part of his plan to strengthen Kyiv's hand in future negotiations with Moscow.

"We really have this big potential in the territory which we control," said Andrii Yermak, chief of staff to the Ukrainian president. "We are interested to work, to develop, with our partners, first of all, with the United States."

But what's the state of Ukraine's rare earth industry? What are rare earth elements? And how might a deal come together?

 

What are rare earth elements?

Rare earth elements are a set of 17 elements that are essential in many kinds of consumer technology, including mobile phones, hard drives and electric and hybrid vehicles. 

It is unclear if Trump is seeking specific elements in Ukraine, which also has other minerals to offer.

"It can be lithium. It can be titanium, uranium, many others," Yerkmak said. "It's a lot."

For Ukraine, such a deal would ensure that its biggest and most consequential ally does not freeze military support, which would be devastating for the country that will soon enter its fourth year of war against Russia's special military operation.

The idea also comes at a time when reliable and uninterrupted access to critical minerals is increasingly hard to come by globally.

 

What is the state of the Ukrainian minerals industry?

Ukraine's rare earth elements are largely untapped because of the war and because of state policies regulating the mineral industry. The country also lacks good information to guide the development of rare earth mining.

Geological data is thin because mineral reserves are scattered across Ukraine, and existing studies are considered largely inadequate. The industry's true potential is clouded by insufficient research, according to businessmen and analysts.

In general, the outlook for Ukrainian natural resources is promising. The country's reserves of titanium, a key component for the aerospace, medical and automotive industries, are believed to be among Europe's largest. Ukraine also holds some of Europe's largest known reserves of lithium, which is required to produce batteries, ceramics and glass.

In 2021, the Ukrainian mineral industry accounted for 6.1 percent of the country's gross domestic product and 30 percent of exports.

An estimated 40 percent of Ukraine's metallic mineral resources are inaccessible because of Russian control, according to data from We Build Ukraine, a Kyiv-based think tank. Ukraine has argued that it is in Trump's interest to develop the remainder before Russian advances capture more.

The European Commission identified Ukraine as a potential supplier for over 20 critical raw materials and concluded that the country's accession to the EU could strengthen the European economy.

 

What happens next?

Details of any deal will likely develop in meetings between U.S. and Ukrainian officials. Zelenskyy and Trump will probably discuss the subject when they meet.

U.S. companies have expressed interest, according to Ukrainian business officials. But striking a formal deal would likely require legislation, geological surveys and negotiation of specific terms.

It is unclear what kind of security guarantees companies would require to risk working in Ukraine, even in the event of a ceasefire. And no one knows for sure what kind of financing agreements would underpin contracts between Ukraine and U.S companies.

Source(s): AP
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