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Portions of this critical questions analysis were previously published in a CSIS Critical Minerals article on February 21, 2025.
U.S. President Donald Trump and Ukrainian President Volodymyr Zelensky have reached a bilateral agreement for the United States to jointly invest in Ukraine’s critical minerals and other valuable resources. While the framework leaves many details to be worked out, this is the first agreement of its kind. As additional countries, such as the Democratic Republic of the Congo, seek a similar deal, understanding the terms of the Ukraine deal and its likely efficacy has important implications for U.S. mineral security.
Q1: What are the terms of the U.S.-Ukraine minerals deal?
A1: The bilateral agreement is markedly different from the original minerals deal proposed by the Trump administration. The initial deal called for Ukraine to use its mineral resources to repay the United States $500 billion for military aid previously provided. The agreed upon framework does not designate the rights of $500 billion worth of minerals revenues to the United States nor does it include a security guarantee for Ukraine. Rather, the agreement establishes a reconstruction investment fund with joint U.S. and Ukraine ownership. Ukraine will contribute 50 percent of all revenues earned from the future monetization of all Ukrainian government-owned natural resource assets into the fund. This includes minerals deposits, oil, natural gas, and other relevant infrastructure, but, notably, it does not include resources that are already serving as a revenue source to Ukraine, such as the operations of Naftogaz and Ukrnafta, Ukraine’s largest oil and gas producers. This means, the profitability of the fund is entirely dependent on the success of new investments in Ukraine’s resources.
Contributions to the fund will be reinvested into projects in Ukraine to further develop assets including mineral deposits, oil, natural gas, infrastructure, and ports. These projects will need to be further defined in the final fund agreement. These investments from the fund intend to spur further private sector interest in investing in Ukraine’s resources and attract the necessary capital for Ukraine’s reconstruction and development of resources. Therefore, the response of private industry is key to the success of the fund and will determine how much value the United States ultimately derives.
The agreement includes little to guarantee Ukraine’s security or reaffirm U.S. financial and military support in the ongoing conflict. However, the idea is that with joint U.S.-Ukraine investment in the nation’s resources, the United States will continue to have a stake in Ukraine’s security, stability, and lasting peace and therefore be incentivized to uphold and defend Ukrainian security. President Zelensky is expected to meet with President Trump in Washington on Friday to sign the agreement.
Q2: How likely is the bilateral agreement to move the needle on U.S. minerals security?
A2: Mining is a long-term effort—so the United States may not yield benefits for another 20 years. Ukraine still needs to undertake a comprehensive geological mapping. From the time reserves have been identified, globally, it takes an average of 18 years to develop a mine and costs $500 million and $1 billion to build a mine and separation plant.
Even in the long-term, the success of the bilateral agreement ultimately hinges on the ability of Ukraine to attract private investment in its mineral resources. The U.S. government cannot command private companies to mine in Ukraine as China and Russia can with their state-owned enterprises. While government-to-government agreements can be a helpful market signal to the private sector and spur investments that may otherwise not occur, the barriers to investment in Ukraine pose immense challenges that the bilateral agreement will be unlikely to surmount with additional financial and/or security resources. Namely, challenges with the lack of reliable reserve data to confirm economic viability, the loss of key infrastructure, and the ongoing security risks in the region jeopardize the viability of long-term minerals investments.
First, there is very limited data on whether Ukraine’s rare earth elements and other strategic materials are commercially viable to mine. According to the former director general of the Ukrainian Geological Survey, there is no modern assessment of rare earth reserves in Ukraine. Existing mapping was done 30–60 years ago by the Soviet Union and relies on old exploration methods. Considerations that impact the commercial feasibility of mining deposits include depth, ore grade, byproducts, and location. Without confirmation of this data, mining companies are unlikely to risk investing hundreds of millions of dollars in potentially unviable deposits.
Second, the war has wiped out essential infrastructure. Mining is among the most energy-intensive industries worldwide. It accounts for approximately 38 percent of global industrial energy use and around 15 percent of total electricity consumption globally. Between 2022 and 2023, nearly half of Ukraine’s power generation capacity was either occupied by Russian forces, destroyed, or damaged, while about half of the country’s large network substations sustained damage from missile and drone strikes. As a result, Ukraine has been left with only about one-third of its prewar power capacity. There will need to be a significant buildout of energy infrastructure for mineral exploration or production to commence.
Lastly, mining companies are reluctant to make long-term investments due to the ongoing security risk in Ukraine. The absence of security assurances in the bilateral agreement further complicates the situation. A new mine can run for over 50 years. Confidence in the political and economic stability of a jurisdiction is critical given the size and longevity of the investment. While Trump, Putin, and Zelensky may reach a peace deal, threat of further conflict and land expropriation will loom given the long-standing nature of the conflict. The Russia-Ukraine war, the deadliest conflict in Europe since World War II, started 11 years ago. After Ukraine’s Maidan Revolution, Russian forces took control of Crimea in early 2014. Russia later engaged in the conflict in the Donbas, leading to Russian and Russian-backed forces occupying parts of Donetsk and Luhansk in eastern Ukraine. Putin has announced that he’s willing to enter into his own minerals agreement negotiations for minerals not only located in Russia but also on Russia-occupied land.
Q3: What does the agreement signify for Trump’s approach to minerals diplomacy?
A3: Trump’s determination to secure Ukraine’s mineral resources has cemented critical minerals as a focal point in the administration’s foreign policy. As the Trump administration approaches international diplomacy with a more transactional lens, critical mineral resources are bound to be a part of the conversation. The administration’s emphasis on securing critical minerals is positive, but bilateral minerals agreements should be made with good geological data and the needs of the private sector in mind.
The Ukraine agreement may be the first minerals deal of its kind, but it will likely not be the last the Trump administration negotiates. Already, Trump has shown interest in accessing minerals from Greenland, Canada, and even Russia. The U.S. government needs a measured, data-backed approach to working with partner nations to facilitate strategic investments. This approach relies on significant private-sector buy-in.
Q4: What do these developments mean for U.S.-Ukraine relations under Trump, and what are the implications for the future of Ukraine and NATO security?
A4: Trump has consistently vocalized throughout his campaign run and first few weeks in office that he would be taking a different approach to the Russia-Ukraine conflict compared to the Biden administration over the last three years. While the Biden administration aimed to isolate Russia on the international stage via tightening sanctions, Trump has opened diplomatic doors to Moscow with a 90-minute phone call weeks into his second term, high-level in-person talks with representatives from the administration, and a tentative meeting between President Trump and President Putin in Saudi Arabia in the near future. Additionally, while Biden consistently prioritized arming and aiding Ukraine, Trump has taken a more transactional approach and questioned the utility of continuing to bolster Ukraine financially and militarily.
Tensions have risen considerably between Trump and Zelensky, as critical mineral resource access is the latest arena for Trump to focus his transactional methods of diplomacy. But the viability of the deal remains to be seen as tensions continue to rise between the two world leaders. Trump seemingly blamed Ukraine for starting the war with Russia and called Zelensky a “dictator without elections.” Meanwhile, Secretary of Defense Pete Hegseth has said U.S. troops would not be deployed to Ukraine as part of any security guarantees for the country.
Under the Trump administration, Ukraine, Europe, and NATO as a whole are likely to face a great decline in security guarantees from the United States without offering strategic resources or financial compensation in return.
Q5: What should the U.S. government be doing to encourage private investment in challenging international markets such as Ukraine?
A5: While the security environment in Ukraine may not currently be apt for large private investments in resource development, the U.S. government is right to be looking at what it can do to encourage investments in jurisdictions abroad that are mineral rich but challenging to access due to the elevated risks for investors. There are concrete policy and bureaucratic changes the United States can make to better support and mitigate risks for private industry making strategic investments abroad.
Firstly, the United States should boost funding and expand the capabilities of the U.S. Geological Survey to carry out geological mapping and minimize exploration risks in critical areas. Second, the United States needs to support strategic infrastructure development in key jurisdictions. Globally, the United States offers multiple avenues for funding international infrastructure projects, including the Development Finance Corporation and Power Africa. And third, the U.S. government should use targeted financial incentives for Western companies to be able to compete against adversaries in high-risk mining jurisdictions. Successful minerals diplomacy will necessitate the use of an arsenal of U.S. policy tools, tax credits, loan guarantees, and price support mechanisms, which are all tools that can be leveraged to make U.S. mineral projects more competitive against heavily subsidized Chinese competitors.
Gracelin Baskaran is the director of the Critical Minerals Security Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Meredith Schwartz is a research associate for the Critical Minerals Security Program at CSIS.
