With a polarizing shift in U.S.-Ukraine relations, President Donald Trump and Ukrainian President Volodymyr Zelensky have reached a first-of-its-kind agreement for joint investment in Ukraine’s critical minerals and natural resources. The deal aims to boost U.S. access to key materials like rare earth elements, lithium, and natural gas, while helping Ukraine rebuild its war-torn infrastructure and attract private investment. However, with no direct security guarantees for Ukraine and major logistical challenges ahead, many are questioning whether the agreement will truly deliver on its promises.
What’s in the Deal?
Unlike the original proposal from the Trump administration, which would have required Ukraine to use mineral revenues to repay $500 billion in U.S. military aid, the finalized agreement instead establishes a Reconstruction Investment Fund. Under this structure, Ukraine will contribute 50% of all revenue earned from newly monetized government-owned resource assets—including minerals, oil, natural gas, and infrastructure—into a jointly managed fund with the United States. This money will then be reinvested into development projects in Ukraine, such as mining operations, energy production, and port expansions, in hopes of drawing private sector interest.
However, the agreement does not include existing revenue streams from major Ukrainian energy producers like Naftogaz and Ukrnafta, meaning the fund’s profitability will be entirely dependent on new projects. The success of these investments will largely hinge on how much confidence private companies have in Ukraine’s ability to extract and process critical minerals at a commercial scale.
Despite the economic focus, the agreement does not provide Ukraine with a formal security guarantee or a commitment to ongoing U.S. military or financial support. Instead, the hope is that U.S. investment in Ukraine’s resources will create a vested interest in the country’s stability, theoretically discouraging future Russian aggression. Zelensky and Trump are set to sign the agreement in Washington on Friday, but the long-term impact remains uncertain.
Will the Deal Strengthen U.S. Mineral Security?
The deal highlights Trump’s strategic push for U.S. dominance in global mineral markets, but whether it will significantly improve America’s mineral security is still in question. Mining is a long-term process, with new operations typically taking 15 to 20 years to become fully operational. Ukraine still lacks a modern geological survey of its mineral deposits, meaning there’s little reliable data on whether its rare earth elements and other resources are even commercially viable. The last comprehensive mapping of Ukraine’s mineral wealth was conducted by the Soviet Union 30 to 60 years ago, using outdated exploration methods. Without this crucial information, it’s unclear if Ukraine can attract enough private investment to make large-scale mining a reality.
Infrastructure is another major roadblock. Mining requires massive amounts of energy, and Ukraine’s power grid has been severely damaged by the war. Since 2022, nearly half of the country’s power generation capacity has been destroyed or occupied, leaving Ukraine with only about one-third of its pre-war energy capacity. Without significant infrastructure investment, any new mining projects could face serious logistical challenges.
Security concerns further complicate the situation. The absence of security guarantees in the agreement makes it unlikely that private companies will be eager to invest in a country still facing an active conflict with Russia. Mining operations require decades of stability, and given the long history of territorial disputes and geopolitical tension in the region, investors may see Ukraine as too risky of a bet for the foreseeable future.
A New Approach to Minerals Diplomacy
Trump’s push to secure critical minerals in Ukraine underscores his transactional approach to diplomacy, where access to strategic resources is a key bargaining chip. Unlike previous administrations that prioritized military aid and diplomatic pressure on Russia, Trump has opened the door to direct negotiations with Moscow. Just weeks into his second term, he held a 90-minute phone call with Russian President Vladimir Putin, followed by high-level talks between U.S. and Russian officials. There are even reports that Trump and Putin may meet in Saudi Arabia in the near future.
While Biden’s administration worked to tighten sanctions on Russia, Trump appears to be shifting toward resource-based diplomacy, where economic agreements take precedence over military commitments. This strategy is already drawing interest from other nations, with the Democratic Republic of the Congo reportedly seeking a similar minerals deal.
Despite the potential economic benefits, Trump’s transactional diplomacy has heightened tensions with Zelensky, who has been vocal about Ukraine’s need for stronger security assurances. The agreement may bring economic opportunities, but with no direct commitment to Ukraine’s long-term safety, questions remain about whether it will truly strengthen U.S.-Ukraine relations or if it will leave Ukraine in a weaker position as it continues to battle Russian aggression.
What’s Next?
The minerals agreement is expected to be finalized this week, but its success will ultimately depend on whether Ukraine can attract private investors, rebuild critical infrastructure, and ensure long-term stability. The U.S. government’s role will be limited to signaling support, as it lacks the ability to force private companies to invest in high-risk regions like China and Russia can with their state-owned enterprises.
For now, the deal represents a shift in U.S. foreign policy, prioritizing economic agreements over traditional military alliances. But whether this new approach will strengthen America’s global minerals security or leave Ukraine struggling to meet expectations remains to be seen.
