How the Ukraine-U.S. Rare Earth Deal Could Benefit America

Rare earth minerals are at the centre of modern technological and defence industries. As geopolitical tensions continue to rise, securing a stable and diversified supply chain has emerged as a crucial strategic goal. In this context, a potential mineral deal between Ukraine and the United States presents a promising opportunity with the potential to reshape the global supply dynamics.

Over the last 40 years, the U.S. capability in rare earth mining has significantly diminished, overshadowed by cheaper alternative suppliers, particularly China. According to a report by the United States Geological Survey (USGS), the U.S. has been 100% reliant on gallium imports, with China accounting for 21% of this supply (Home, 2024).

Using data from the Mineral Commodity Summary 2025, the compilation of some of these critical minerals in the graphic above clearly displays that China remains one of the primary suppliers of these critical minerals.  While the US does find these minerals with other suppliers, China is almost omnipresent in this chart of imports from 2020 to 2023. The Center for Strategic and International Studies (CSIS) reports that China is the largest supplier of 26 out of the 50 minerals deemed critical by the U.S. (Home, 2024). This dependency has historically created an uncertain environment for the U.S., as China’s dominance in rare earth element (REE) mining, refining, and component manufacturing exposed America to multiple disruptions in exports (Congressional Research Service, 2020). These disruptions have occurred multiple times, including export restrictions imposed by China between 2010 and 2014 and again in 2023. Both instances led to instability and price hikes, reinforcing the urgency for the U.S. to diversify its sources of imports.

Risks of Escalation

The U.S. Government Accountability Office (GAO) has highlighted the risk of rare earth supply chain disruptions and classified it as a national security threat. The Department of Defense (DoD) has also identified these rare earth elements as “essential building blocks” in many weapon systems, enabling high-performance combat capabilities (GAO, 2024).

The CSIS describes even broader implications for the U.S. following China’s 2023 ban on rare earth extraction and separation technologies. Without developing its own processing capabilities, the U.S. risks further weakening its national, energy, and economic security due to China’s technical advantages in rare earth processing, particularly in solvent extraction. Additionally, new U.S. facilities for separation, processing, and manufacturing take years to build and become fully operational (Baskaran, 2024). These critical minerals have become a “key battleground” in the trade war between China and the U.S., and they will likely remain a tool China uses to retaliate against any American restrictions (Home, 2024).

The Ukraine Mineral Deal: A Potential Solution?

There are signs that the U.S. is actively working to break its dependence on China for rare earth minerals. This is evident in the pressure exerted by the Trump administration on Ukraine to finalise a mineral deal. According to Politico, previous American efforts to increase domestic production of critical minerals have had little impact, making the deal with Ukraine a potential long-term solution (Bikales, 2025).

While the deal would serve Trump’s broader trade war strategy, it could also provide much-needed economic opportunities for Ukraine. The Ukrainian government has been lobbying Washington to maintain its support for the war effort. The mineral deal aligns with Trump’s business-oriented approach, making it an attractive option for his administration (Zoya Sheftalovich, Melkozerova, & Dettmer, 2025).

What Does Ukraine Have to Offer?

Ukraine is said to have one of the largest deposits of rare earth minerals yet to be exploited. Records from the Institute of Geology show that Ukraine has significant reserves of lithium, titanium, lanthanum, cerium, erbium, and yttrium (Watling, 2025). An assessment by the Ukrainian Ministry of Ecology positions Ukraine as one of the leading countries in terms of graphite reserves, with its lithium reserves accounting for one-third of all those in Europe.

However, a major issue is that the last comprehensive assessment of these minerals dates back to the Soviet era. Even more so, as shown in the map above much of the land containing the mines that can refine these resources are currently under Russian control (Georges, 2025). Some experts doubt the scale of Ukraine’s reserves and question the profitability of future extractions. Morgan Bazilian, director of the Payne Institute for Public Policy at the Colorado School of Mines, has called the deal a “breathless fantasy that we will magically solve our critical mineral constraints through a country at war” (Georges, 2025). A CSIS assessment supports this view, arguing that the deal will not provide immediate returns and that the key challenge remains the need to build infrastructure in a country devastated by war (Baskaran & Schwartz, 2025).

Setbacks and Challenges in the Deal

Despite its initial promise, the deal itself has faced significant hurdles. Originally planned as a mutually beneficial initiative, it has become a source of contention. Reports indicate that the agreement would grant American companies’ ownership of 50% of Ukraine’s untapped critical mineral reserves, along with access to other natural resources, yet does not include security guarantees for Ukraine.

Tensions between the Trump administration and Ukraine have risen due to disagreements over the terms of the deal, leading to multiple delays. The peak of these tensions came during a heated exchange between Trump, Zelensky, and Vance at the White House. As it stands, the agreement remains uncertain, and relations between Washington and Kyiv appear more strained than ever.

The Road Ahead

Taking all these factors into consideration, the future of this agreement remains unclear. What is evident, however, is that any foreign investment in Ukraine’s mining sector will require strong security guarantees from the U.S. Mining is a long-term endeavour, and investors will only commit if they are confident that they can operate in a stable and secure environment. As the CSIS puts it: “Confidence in the political and economic stability of a jurisdiction is critical given the size and longevity of the investment (Baskaran & Schwartz, 2025). ).” With no security guarantees, efficiency of the deal would therefore rest entirely on the hope that Russia will hold its part of the deal in a potential cease-fire accord. While Ukraine’s mineral potential offers an opportunity, geopolitical and infrastructural challenges must be addressed to ensure a stable and secure supply chain.

Bibliography 

Baskaran, G. (2024). What China’s Ban on Rare Earths Processing Technology Exports Means. Center for Strategic & International Studies. [online] Available at: https://www.csis.org/analysis/what-chinas-ban-rare-earths-processing-technology-exports-means. 

Baskaran, G. and Schwartz, M. (2025). Assessing the Viability of a U.S.-Ukraine Minerals Deal. [online] Csis.org. Available at: https://www.csis.org/analysis/assessing-viability-us-ukraine-minerals-deal. 

Bikales, J. (2025). POLITICO Pro: US heavily reliant on imported critical minerals, USGS report finds. [online] @POLITICOPro. Available at: https://subscriber.politicopro.com/article/2025/01/us-heavily-reliant-on-imported-critical-minerals-usgs-report-finds-00201855 [Accessed 4 Mar. 2025].

Congresional Research Service (2020). An Overview of Rare Earth Elements and Related Issues for Congress. [online] Available at: https://crsreports.congress.gov/product/pdf/R/R46618. 

Georges, L. (2025). Ukraine rare earths potential relies on Soviet assessments, may not be viable. [online] S&P Global Market Intelligence. Available at: https://www.spglobal.com/market-intelligence/en/news-insights/articles/2025/2/ukraine-rare-earths-potential-relies-on-soviet-assessments-may-not-be-viable-87318842 [Accessed 4 Mar. 2025].

Home, A. (2024). Critical metals will be a key battleground in US-China trade war. Reuters. [online] 18 Dec. Available at: https://www.reuters.com/markets/commodities/critical-metals-will-be-key-battleground-us-china-trade-war-andy-home-2024-12-17/. 

Ministry of Ecology and Natural Resources of Ukraine (n.d.). UKRAINE Critical Minerals Portfolio Ministry of Ecology and Natural Resources of Ukraine Ukrainian Geological Survey. [online] Available at: https://www.geo.gov.ua/wp-content/uploads/presentations/en/critical-minerals-portfolio.pd. 

US Government Accountability Office (2024). Critical Materials: Action Needed to Implement Requirements That Reduce Supply Chain Risks. [online] Available at: https://www.gao.gov/assets/880/871168.pdf [Accessed 3 Mar. 2025].

Watling, T. (2025). What are Ukraine’s rare earth minerals, where are they and what will the deal with Trump involve? [online] The Independent. Available at: https://www.independent.co.uk/news/world/europe/ukraine-minerals-deal-trump-zelensky-rare-earth-russia-b2706541.html [Accessed 4 Mar. 2025].

Zoya Sheftalovich, Melkozerova, V. and Dettmer, J. (2025). Ukraine reels in Trump with mineral riches. [online] POLITICO. Available at: https://www.politico.eu/article/donald-trump-ukraine-mineral-riches-greenland-plan-deal-olaf-scholz-democracy/ [Accessed 4 Mar. 2025].