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Ukraine Rejects US Bid for Critical Minerals, Seeks Better Deal

by February 19, 2025
February 19, 2025
Ukraine Rejects US Bid for Critical Minerals, Seeks Better Deal

Ukrainian President Volodymyr Zelenskyy has declined a US bid to take control of half of Ukraine’s rare earth mineral rights, instead signaling his intention to pursue a more favorable deal.

The proposal, brought to Kyiv last week by American Secretary of the Treasury Scott Bessent, came after President Donald Trump’s controversial suggestion that the US should secure approximately US$500 billion worth of Ukraine’s critical resources in exchange for military support amid the country’s ongoing war with Russia.

The proposed agreement would have granted the US ownership of around 50 percent of Ukraine’s substantial reserves of minerals such as lithium, titanium and graphite — resources vital for high-tech industries and defense.

The deal presented by Bessent centers on repayment for past US aid, without addressing future assistance or security guarantees, a key point of concern for Zelenskyy and his administration.

Zelenskyy, alongside other Ukrainian officials, has expressed reservations over the terms of the deal.

The Ukrainian president is seeking a broader arrangement that ties the country’s mineral rights to ongoing protection.

“We are still talking,” Zelenskyy remarked during a press briefing in Munich on Saturday (February 15).

He emphasized that any agreement would need to involve not just the US, but also other international partners, including European Union countries, to ensure Ukraine’s long-term security and stability.

The lack of clear security guarantees in the proposal has raised questions in Ukrainian circles, particularly as Russian forces continue to target vital infrastructure, including eastern regions rich in mineral resources.

Bessent has defended the US proposal, saying that the presence of American forces looking to secure Ukrainian mineral deposits would serve as a deterrent to Russian aggression. This explanation has done little to reassure Ukrainian officials, who have criticized the deal for failing to offer a substantive long-term security framework.

The Financial Times reported that a senior Ukrainian official, familiar with the negotiations, described the document as “tough,” with little regard for Ukraine’s sovereignty and future needs.

Adding complexity to the negotiations, the US proposal specifies that any disputes over the mineral rights would be resolved under New York law. Ukrainian officials have expressed skepticism about the enforceability of such terms, particularly given the ongoing conflict and the difficulties of conducting business in a war-torn country.

Zelenskyy has made it clear that Ukraine will not sign any deal until further legal review and negotiations are completed.

Ukraine’s mineral sector faces significant challenges. The country’s critical minerals are located in areas heavily affected by the conflict with Russia, making extraction and development operations risky and difficult to manage.

The Zavallivsky graphite mine, for example, a vital source of the nation’s mineral wealth, has suffered from equipment shortages and workforce reductions due to the war, hindering its ability to expand production to meet potential demand.

Furthermore, industry experts have warned that large-scale extraction of Ukraine’s minerals would require significant foreign investment, which remains uncertain amid the unstable security situation. Without it, the country’s mineral reserves are likely remain underdeveloped, despite their immense potential value.

Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.

This post appeared first on investingnews.com
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