Quick Deal

On February 25, the US and Ukraine officially reached a framework agreement on mineral exploitation, marking a turning point in bilateral relations between the two countries. This agreement is not only considered an economic transaction, but also reflects deep geopolitical calculations between major powers such as the US, Russia, and the EU.

The background to this agreement is the three-year conflict between Ukraine and Russia, which began in February 2022. During this time, the US has provided significant military and financial support to Ukraine. However, with the “America First” policy of the Trump administration seeking to reduce the financial burden, exploiting Ukraine’s resources is seen as a solution to offset costs and continue to maintain support.

Mr. Trump also expressed his ambition to quickly end the Russia-Ukraine conflict as he promised voters.

The White House boss said that aid to Ukraine is "unfair" and needs to be compensated with resources, especially rare earths - something the US is heavily dependent on China for.

Ukrainian President Volodymyr Zelensky is expected to visit Washington on February 28 after officials from both countries agreed on the terms of the mineral deal.

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Ukraine has mineral deposits worth $12 trillion, concentrated mainly in the east. Source: IP

Details of the framework agreement were not released, but according to media reports, the US and Ukraine will jointly exploit mineral resources in Ukraine, with revenues going into a completely new investment fund “co-managed by Ukraine and the US.” Ukraine will contribute 50% to the fund, from revenues from natural resources (including rare earths, lithium, titanium) and related infrastructure.

The fund's goal is to support development projects in Ukraine and create economic ties between the two countries.

The agreement does not cover mineral resources that contribute to the Ukrainian government budget. This means that Ukraine's largest oil and gas producers, Naftogaz and Ukrnafta, will not be affected.

According to WSJ and FT , the Trump administration previously demanded that Ukraine reimburse $500 billion in resource extraction revenue in exchange for military and financial support from the US. This request met with strong opposition from Ukraine, especially President Zelensky, due to the lack of specific security guarantees and unfair profit sharing ratio.

After several rounds of intense negotiations, the $500 billion figure was dropped from the final deal, with a focus instead on long-term profits from minerals.

Mr Zelensky's administration will need approval from parliament.

Regional geopolitical landscape could be reshaped

Ukraine is considered a mineral treasure of Europe, possessing about 5% of the total global mineral reserves. Notably, Ukraine has large reserves of titanium, lithium, uranium, coal, iron, nickel and especially rare earths - important raw materials in semiconductor technology, lithium-ion batteries, and military equipment.

Ukraine's mineral resources are estimated at $12 trillion, of which, according to Forbes, about $7 trillion of Ukraine's total mineral wealth is located in Donetsk and Lugansk, two regions that joined Russia in 2022.

The wealth of resources makes Ukraine a region of special geopolitical value, attracting the attention of major powers, especially the US and the European Union (EU).

It can be seen that Mr. Trump sees mineral resources in Ukraine as an opportunity to reduce dependence on China - a country that accounts for 60-70% of global rare earth production; at the same time, it helps strengthen the supply chain for American technology, from electric vehicles to defense.

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Map of distribution of mineral resources in Ukraine. Source: IP

Clearly, the US-Ukraine mineral deal would give the United States access to a vast strategic resource. If Mr. Trump were to turn Ukraine into a US “mineral base,” it would be a strategic move to strengthen its global competitive position.

However, actual exploitation depends on the war situation, as many large mines are located near the front line or are controlled by Russia.

For Ukraine, the country has won some important benefits. The Reconstruction Investment Fund promises to provide capital to rebuild the country after the war. Not having to directly repay the $500 billion in aid that Trump announced could be a big win for Zelensky. In addition, the agreement to strengthen Ukraine’s alliance with Washington gives Kiev leverage in negotiations with Russia.

But Ukraine would lose control of a significant portion of its mineral revenues. Its dependence on the US could turn it into the “raw materials hub” that Zelensky feared.

As for the EU, Europe is concerned that the US will monopolize Ukraine’s resources, weakening Europe’s role in the region. The EU had previously proposed a separate agreement with Ukraine on the exploitation of strategic minerals, emphasizing its unconditional support. However, the US has conducted bilateral negotiations with Ukraine without the EU’s participation.

Conversely, if peace is established thanks to the US-Russia agreement, the EU could benefit from regional stability as well as avoid rising inflation and the risk of economic growth decline.

Meanwhile, Russia is wary of the possibility of the US deploying troops near the border under the guise of protecting mines, seeing it as a threat to Russia’s border security. However, with Mr. Trump’s recent statements, Russia still has the advantage of controlling a large amount of Ukrainian resources, which it can exploit or block US access.

The US-Ukraine mineral deal is a multi-faceted move by Trump, both meeting US economic interests and reshaping the geopolitical landscape in Europe. The US gains strategic resources, Ukraine strengthens support from Washington, but Russia and the EU face new challenges.

Given Ukraine's vast resource wealth, the deal is not just an economic story but also a battle of wits between major powers, where each side must weigh the benefits and risks in a volatile world.

Donald Trump's new geopolitical move could wake up the aging EU economy. US President Donald Trump's stance on Ukraine has shaken Europe and shaken the transatlantic alliance. It could wake up the aging EU economic machine and make Russia's economy recover strongly.