Discussions between US and Ukrainian officials regarding the continuation of American military assistance in exchange for access to Ukraine's valuable mineral resources are gaining momentum following a difficult beginning, which Kyiv hopes will ultimately lead to long-term support for its defense against Russia.
Ukraine has proposed an agreement with President Donald Trump, which would supply the U.S. with rare earth elements - essential for various technologies. Trump stated his interest in such a deal earlier this month, and it was initially proposed in the fall by Ukrainian President Volodymyr Zelenskyy as part of his plan to bolster Kyiv's position in potential future negotiations with Moscow.
However, Kyiv initially rejected the initial US proposals, citing insufficient security guarantees for Ukraine and expressing concern that the proposed $500 billion price tag would burden future generations with a massive debt.
Signs from both sides indicate that the gap may be narrowing, and a deal could be on the horizon.
Here is a look at Ukraine's rare earth sector and the process by which a deal could be reached:
What are rare earth elements?
Rare earth elements are a group of 17 elements that are crucial for a wide range of consumer technology products, such as cellphones, hard drives, and electric and hybrid vehicles.
It remains unclear what specific minerals Trump is targeting in Ukraine, which possesses a diverse array of mineral resources.
It could be lithium, it could be titanium, or even uranium, among many other options," Yermak said. "There are a lot of possibilities.
China, Trump's chief geopolitical rival, is the world's leading producer of rare earth elements. Both the United States and Europe have sought to minimize their reliance on Beijing.
For Ukraine, such a deal would guarantee that its most significant and impactful ally does not halt military assistance. This would be catastrophic for the country, which has been embroiled in conflict for nearly three years since Russia's large-scale invasion on February 24, 2022.
The concept emerges at a point in time when secure and uninterrupted access to vital minerals is becoming increasingly difficult to obtain worldwide.
What is the current status of the Ukrainian minerals industry?
Ukraine's rare earth elements remain largely unexploited due to the ongoing war and restrictive state policies governing the mining industry. Furthermore, the country lacks reliable data to inform the development of rare earth mining operations.
Geological data is limited due to the dispersed nature of mineral reserves in Ukraine, and current studies are deemed largely insufficient. According to businessmen and analysts, the industry's true potential remains obscured by the lack of adequate research.
Generally, the outlook for Ukraine's natural resources is optimistic. The country has some of the largest known reserves of titanium in Europe, which is a crucial element for the aerospace, medical, and automotive sectors. Ukraine also possesses significant deposits of lithium, a mineral essential for producing batteries, ceramics, and glass, ranking among Europe's largest.
In 2021, the Ukrainian mining industry comprised 6.1% of the nation's overall gross domestic product and 30% of its total exports.
It is estimated that around 40% of Ukraine's metallic mineral resources are currently inaccessible due to Russian occupation, according to data from We Build Ukraine, a Kyiv-based think tank. Ukraine has argued that it is in the best interest of the US to develop the remaining resources before further Russian advances make them inaccessible.
The European Commission, the executive branch of the European Union, has identified Ukraine as a potential supplier of over 20 crucial raw materials. It has concluded that if Ukraine joins the 27-member EU, it could boost the European economy.
What happens next?
Talks over a mineral agreement between U.S. and Ukrainian officials have intensified in recent days as Kyiv has pushed back on initial proposals due to a lack of specific security guarantees for Ukraine.
US Trump administration officials have attempted to persuade Zelenskyy to accept an agreement where Ukraine would transfer $500 billion in profits from extracted minerals to Washington as a form of compensation for its wartime assistance.
President Zelensky has refused the proposal, stating that although Kyiv is open to collaborating with the US on mineral resources, he will not accept an agreement that would burden ten generations of Ukrainians with the cost.
In a sign that negotiations on a deal were progressing, Zelenskyy stated on Sunday at a forum in Kyiv, which was marking the three-year anniversary of Russia's invasion, that the U.S.' request for $500 billion had been "taken off the table."
US special envoy to the Middle East, Steve Witkoff, stated in an interview on CNN's "State of the Union" that he anticipates a deal to be finalized this week, allowing the US to participate more significantly in the extraction of Ukraine's mineral resources.
US companies have expressed interest in collaborating with Ukraine on extracting minerals, but a formal agreement is expected to necessitate new legislation, geological studies, and more detailed negotiations regarding specific terms.
It remains uncertain what type of security assurances businesses would demand to operate in Ukraine, even in the event of a ceasefire. Moreover, no one is certain about the financial agreements that would support contracts between Ukraine and US companies.