Ukraine and the US Return to Reviewing the Rare Earths Agreement. US Appetites Are Growing.
In addition, the Americans have begun parallel negotiations with the Russians on rare earths.
The Thorny Path to the Agreement
As a reminder, Ukraine and the US were to sign a framework agreement on rare earths on February 28, 2025. The document included a commitment to begin negotiations with the US on a second, more detailed agreement that would regulate the work of the Ukraine Recovery Investment Fund, a bilateral structure that Ukraine and the US were to create and where Ukraine would invest 50% of future revenues from new mineral developments. At the same time, the agreement was not to apply to the current revenues of Naftogaz and Ukrnafta.
The signing of the agreement was canceled on February 28 after a skirmish between Ukrainian President Volodymyr Zelensky, US President Donald Trump, and US Vice President J.D. Vance at the White House.
However, on March 3, Zelensky confirmed that Kyiv was ready to sign an agreement with the US on minerals, provided that the parties were mutually ready and that Ukraine’s position was taken into account. And on March 11, the Office of the President reported that Ukraine and the US had agreed to conclude a comprehensive agreement on the development of critical mineral resources “as soon as possible.”
However, on March 27, 2025, a new version of the agreement on minerals was reported. And it could be worse for Kyiv. MP Yaroslav Zheleznyak published the main provisions of the new agreement, noting that this is not the final document and can still be changed. According to the MP, the agreement provides for:
- the creation of a five-person governing body, where three US representatives will have the right to veto.
- The agreement is indefinite, covers the entire territory of Ukraine and provides for the extraction of all existing and new minerals by both state and private companies.
- The US contribution to the implementation of the agreement is considered to be the aid provided to Ukraine since 2022. All funds from the fund will be immediately converted into currency and transferred abroad, and if Ukraine does not receive the stipulated payments, the government will be forced to compensate them.
If the agreement is adopted, writes Bloomberg, it will give the US vast powers to control investments in Ukraine in projects including roads and railways, ports, mines, oil and gas, as well as the extraction of the most important minerals. The agreement will give the US the first claim to profits transferred to a special reconstruction investment fund, which will be controlled by Washington.
Given the restrictive terms of the agreement, we should expect a new wave of pressure on Kyiv.
Trump threatens – and talks to the Russians
At a briefing on March 28, Ukrainian President Volodymyr Zelensky commented on the new text of the minerals agreement. He stressed that the Ukrainian side and lawyers should check the document sent by the Americans. The head of state added that Ukraine does not recognize US military aid as debt. According to him, if there are risky things in the agreement, the Ukrainians will be informed about it.
But such rhetoric is definitely not to the liking of the Americans. On March 31, Donald Trump said that Zelensky wants to abandon an important minerals agreement. He threatened “significant problems” if such a decision is made.
Already on April 1, Trump continued to attack Zelensky. He said that the Ukrainian president “is trying to renegotiate the rare earth metals agreement.” He once again accused former US President Joe Biden of incompetence. According to Trump, he should have asked Ukraine for rare earth metals or demanded that it provide guarantees for repayment of loans “in one form or another.”
According to CNN, Trump stated that the Ukrainian side allegedly links the signing of the mineral resources agreement with joining NATO. He also noted that the very desire of our state to join the Alliance could have been the cause of the war.
As of March 31, Ukraine and the United States had already discussed a new draft agreement on minerals, which was proposed by the American side. But it is not only Ukrainians who are communicating with the Americans. On the same day, it became known that Moscow and Washington had begun their own discussions on various rare earth metals and projects in Russia. Among the potential options for cooperation between the two countries in the extraction of rare earths, deposits in Yakutia and the Krasnoyarsk Territory may be considered.
In turn, ISW analysts are convinced that Russia is actively trying to undermine the conclusion of a potential mineral agreement between the US and Ukraine. And that is why they are offering their rare earths.
On the other hand, it is not a fact that Ukraine will want to sign the mineral agreement in its new form.
Ukraine – in Putin’s hands
As British economist and expert on Ukraine Timothy Ash argues in a column for NV, the agreement between Ukraine and the US on rare earth metals reads “almost like the Treaty of Versailles imposed on Germany by France after the First World War.”
He notes that if the first US mineral agreement with Ukraine had a rather bad appearance, the new text has become even worse.
“Compared to it, the first one looks like charity. Some might call it extortion, some almost colonial exploitation the development of the country’s mineral resources and investment space,” the economist noted.
Ash adds that this agreement acts as a brake on growth for the country, not as its engine. Because if the US seeks to lay hands on the Ukrainian mineral resources and investment space, the economist argues, what is left for other partners? That is, there is no point in Europe or Asia investing in Ukraine if this agreement is in place.
Moreover, Ukraine may not join the EU at all due to the agreement with the States. “EvroPravda” analyzed the new text of the agreement with the US on subsoil, and drew attention to the requirement that US companies will receive the exclusive right to new development of Ukrainian subsoil. And only if a certain deposit has not interested any American investor, Ukraine has the right to offer a license to Ukrainian and European businesses, but even then 50% of the license cost and rent go to the Fund.
This, writes “EP”, is incompatible with neither Ukraine’s existing agreements with the EU, nor with the principles competition in the European Union, which Ukraine seeks to join.
But let’s return to Ash’s column. He writes that because of this agreement, Ukraine will literally lose its sovereignty, and with it the rights to property on assets, will receive an undermining of its fiscal and payment position, and risks of capital outflow.
“And if Ukraine actually signs this agreement, it will show everyone that it is completely dependent on any whim of Trump, and will be subject to pressure from two states, Russia and the United States. (…) By signing this agreement, Ukraine is handing over its future to Trump and Putin,” the economist believes.
And as political strategist and head of the Center for Political Intelligence Oleg Posternak notes on the air of “FREEDOM,” there is one more point in the current draft agreement that Ukraine will never agree to. This is about recognizing all the previous grant aid during the Joe Biden administration as a contribution of the United States to this reconstruction fund.
“In essence, this is Ukraine’s recognition of debt, and this American contribution simply continues as a past investment. This creates certain enslaving consequences for Ukraine,” the expert says.
Posternak quotes Western publications that compare the agreement to Ukraine’s reparations to the States. He is confident that the Ukrainian president will not sign such a document. In addition, in its current form, the agreement does not comply with the Constitution of Ukraine.
“If this agreement does not meet the interests of the Ukrainian people, it will not be signed and ratified by the Verkhovna Rada of Ukraine,” he adds.
Valeria Shipulya, “Correspondent”
