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Why does the US need Ukrainian critical raw materials
The US and the European Union are actively implementing modern technologies in areas such as energy storage, transportation, green electricity production, and aerospace, among others. Batteries, solar panels, nuclear reactors, satellites – all of these require raw materials with specific properties, known as critical raw materials. These include uranium, lithium, titanium, graphite, and other minerals.
Some of these substances are classified as rare earth metals, as they occur in small quantities in ores, and their extraction involves complex, costly, and often environmentally harmful processing methods.
In these processes, China has emerged as a leader over the past few decades.
“This country extracts critical raw materials not only within its own borders but also in other countries around the world, and it concentrates over 90% of the processing of most of these minerals,” commented Roman Opimakh, former head of Ukraine’s State Geological and Subsoil Service, in an interview with RBC-Ukraine.
He explained that the global market has developed as follows: China has taken the lead in the extraction and processing of critical raw materials, while the US and the European Union have become importers of these products, thereby becoming dependent on the Middle Kingdom.
In an interview with RBC-Ukraine, Yehor Perelyhin, former head of the United Mining and Chemical Company (UMCC), which specializes in titanium ore extraction, provided an example of China’s dominant position.
“China extracts more than a third of the world’s titanium-containing minerals and produces nearly 70% of the global volume of titanium sponge. At the same time, China accounts for half of the world’s processing capacity for titanium-containing raw materials into pigment containing titanium dioxide,” said Yehor Perelyhin.
According to the expert, China also processes about 60-70% of the world’s lithium, 80% of bismuth and tungsten, and dominates the cobalt processing sector.
“China has a significant influence on the global extraction of tellurium, indium, germanium, hafnium, and molybdenum. China is almost a global monopoly in the processing of graphite,” said Yehor Perelyhin, adding that Chinese corporations CATL and BYD produce more than 50% of all lithium-ion batteries in the world.
In turn, the US, the expert noted, has become a 100% importer of titanium sponge, which is essential for space programs and the military sector. In light of this dependence, Roman Opimakh stated, that the West is highly interested in regaining its positions in the critical minerals market.
“The goal in the US, as well as in most Western European countries, is to secure their supply chains of critical raw materials, which are vital for transitioning the economy to a ‘green’ course and for using other modern technologies,” said the former head of the State Geological and Subsoil Service.
Is it profitable for Ukraine to sell its rare earth metals
With rich deposits of critical raw materials, our country has a vested interest in their development.
“Ukraine is fully interested in developing these deposits and, ideally, processing and producing at least intermediate products,” said Roman Opimakh, adding that if extraction and production of even semi-finished products could be launched, it would significantly strengthen Ukraine’s economic potential.
Geography of critical raw materials deposits (Infographic by RBC-Ukraine)
The former head of the State Service of Geology and Subsoil emphasized that the wealth of the mineral base is necessary but not sufficient, as Ukraine lacks technologies, capital, and a market for sales. “The US is a large market, they have significant capital and technologies, exactly what Ukraine needs to develop these minerals,” he added.
According to Yehor Perelyhin, Ukraine has the potential to position itself as an industrial hub for the extraction and processing of critical minerals.
“If we work well on setting priorities, if we can identify our key strengths, and if we create enough competitive advantages for reindustrialization, we might be able to create a real success story,” he added.
What is known about the agreement with the US
As of mid-October 2024, President Volodymyr Zelenskyy announced that Ukraine is home to natural resources, including critically important metals, worth trillions of US dollars. He added that Ukraine is offering its partners in the US and the EU to sign special agreements for joint protection and investment in these resources.
The proposal regarding rare earth metals caught the attention of the administration of the new US President Donald Trump. As part of the negotiation process, on February 12, 2025, US Treasury Secretary Scott Bessent visited Ukraine, bringing with him a draft agreement granting access to Ukrainian mineral resources worth $500 billion in exchange for Washington’s assistance. Kyiv refused to sign the agreement as it did not include security guarantees for Ukraine.
Subsequently, the US proposed a second draft agreement, which suggested the creation of a $500 billion fund, to be filled by Ukraine, including from the proceeds of critical raw material extraction. On February 23, Zelenskyy stated that he did not recognize such amounts of debt to the US, reported that the second draft lacked security guarantees, and refused to sign it.
On February 24, Axios reported that the US and Ukraine are in the final stages of negotiations regarding an agreement on access to Ukrainian minerals. According to the publication, the draft agreement, which it obtained, once again does not include any US obligations regarding security guarantees for Ukraine after the war, but it does contain a provision for a fund worth $500 billion, which will be filled with revenues from Ukrainian mineral extraction.
On February 25, the Financial Times reported that Ukraine and the US had agreed on the terms of the rare earth metals deal. Representatives from Kyiv noted that they had managed to negotiate more favorable terms, with the US removing the requirement for a $500 billion debt.
The final version of the agreement (dated February 24) includes the creation of a fund, into which Ukraine will contribute 50% of the revenues from the future monetization of state-owned mineral resources, including oil and gas.
The fund will invest in projects in Ukraine. It will not include mineral resources from which funds are already being directed to the state budget, and it will not cover the activities of Naftogaz and Ukrnafta, the largest Ukrainian producers of gas and oil.
The draft agreement still lacks security guarantees from the US.
On February 24, Russian President Vladimir Putin expressed Russia’s readiness to cooperate with the US in the field of rare earth metal extraction, particularly from deposits located in the occupied territories of Ukraine. He convened a meeting of government officials to discuss the development of the rare earth metals sector in Russia.
