Ukraine and the United States have signed a historic agreement that gives US companies priority access to Ukraine’s deposits of critical minerals, including rare earths, and creates a joint fund for investments in post-war reconstruction. This move, promoted by the Donald Trump administration, is being positioned as a double win: strengthening Ukraine’s economic sovereignty and securing US strategic interests in the global struggle for resources. But is Ukraine ready to become a new mineral hub, and what are the challenges?
Ukrainian subsoil: a treasure trove that was underestimated
Ukraine is a geological gem of Europe, with reserves of 22 out of 34 minerals recognised by the European Union as critical. According to the State Geological Service of Ukraine, the country ranks first in Europe in terms of graphite reserves (20% of the world’s) and is among the top five in titanium, manganese and zirconium. Lithium, rare earth elements (neodymium, cerium, lanthanum), scandium and beryllium make Ukraine a potential leader in the supply of raw materials for green energy, aviation, defence and high technology.
However, Ukraine has historically underestimated this potential. During the Soviet era, mineral production was focused on the needs of the USSR, and after 1991, chaotic privatisation and a lack of investment left most deposits in a state of mothballing. Today, as the world competes for scarce resources, Ukraine has a chance to rewrite its economic history.
What does the agreement with the US provide for?
The agreement signed in Washington creates a strategic investment fund to attract US and international capital to Ukraine’s mining sector. The United States will have priority access to new agreements for the development of deposits, including lithium, graphite and rare earths. According to First Vice Prime Minister Yulia Svyrydenko, Ukraine retains full control over its mineral resources, and the deal does not include debt obligations.
For the United States, this initiative is part of a broader strategy to reduce dependence on China, which controls 63% of global rare earths production and 85% of rare earths processing (according to USGS, 2024). Washington views Ukraine as an economic outpost that can replace military support with long-term investments in critical infrastructure and resources.
Losses at the front and control over resources
The war has made access to Ukraine’s mineral resources difficult. According to the We Build Ukraine think tank and the National Institute for Strategic Studies, about 40% of metal resources, including two key lithium deposits in Donetsk and Zaporizhzhia regions, are located in the occupied territories. Donbas coal mines, rich in associated rare earth elements, are also lost to Ukraine.
However, the central and western regions – in particular Zhytomyr, Dnipro and Kirovohrad regions – hold huge reserves of graphite, titanium, scandium and other minerals. These areas are becoming the basis for a new mineral and economic strategy supported by international partners.
The environmental challenge: the price of progress
Mining rare earths and lithium is not only an economic opportunity but also an environmental challenge. Mineral enrichment processes often lead to the contamination of soil and water with toxic waste. For example, in China, where most rare earths are mined, environmental standards are often ignored, leading to land degradation.
Ukraine will have to introduce expensive clean-up and reclamation technologies in order to meet European standards. Experts estimate that the creation of a modern rare earth mine could cost $500 million or more, with environmental costs of up to 20% of the total budget. Can Ukraine balance its economic ambitions with environmental responsibility? This issue will be key to attracting Western investors, who are increasingly paying attention to ESG criteria (environment, social responsibility, governance).
Obstacles on the way: from bureaucracy to security
Despite the potential, Western investors face a number of barriers:
– Bureaucracy: complicated procedures for obtaining licences and access to geological data.
– Lack of transparency: much of the geological information remains closed or outdated.
– Military risks: the proximity of some fields to combat zones.
– Infrastructure challenges: the need to modernise roads, power grids and processing facilities.
McKinsey & Company (2024) estimates that launching large-scale production in Ukraine will require $10-15 billion in investment over the next decade. This is a long-term project that requires political stability and reforms.
The geopolitical chessboard: Ukraine, the US, China
The deal with the US is not only an economic breakthrough, but also a geopolitical manoeuvre. The global rare earths market is an arena for technological leadership. China, which dominates this area, uses its monopoly as an instrument of political pressure. For example, in 2010, Beijing temporarily restricted exports of rare earths to Japan due to a territorial dispute, forcing the West to look for alternative sources.
Ukraine, thanks to its resources and strategic location, could become part of a new global supply chain that would reduce the West’s dependence on China. However, this could provoke a reaction from Beijing, including economic pressure on Ukraine’s European partners. At the same time, the deal strengthens the US position in Europe, where competition for green energy resources is intensifying.
By comparison, Australia and Canada, which also have significant reserves of rare earths, are already actively attracting investment. For example, the Australian company Lynas Rare Earths received $200 million from the US government in 2024 to expand its processing. Ukraine has a chance to replicate this success, but it requires rapid reforms and a clear strategy.
From the battlefield to the chessboard
The agreement between Ukraine and the United States is more than an investment contract. It is a new model of reconstruction that transforms Ukraine from a humanitarian aid target to a key player in the global economy. Strategic minerals are the currency of the future, and despite the war, Ukraine has a chance to become one of its main suppliers.
But to realise this potential, Kyiv needs to overcome internal barriers, attract technology and ensure environmental sustainability. In the global game for resources, Ukraine is no longer just a pawn, but a queen that can change the balance of power. The only question is whether the country is ready to play this game to the end.
Author: Marianna Nyzhnia
