Shackles, Chimera or Marshall Plan? The story of the unsigned mineral agreement and Zelensky's small victory in negotiations with the Trump team
The agreement on cooperation in the development of Ukraine's mineral resources and the investment mechanism for its post-war recovery has yet to be signed in Washington. However, it cannot be ruled out that both parties may have to return to it in the future.
The history of this 'deal' vividly illustrates Donald Trump’s diplomatic style and negotiation tactics. The idea emerged as part of efforts to exert pressure on Moscow and force it into peace talks. At the next stage, the agreement took on the shape of a neo-colonial chimera: Kyiv was asked to recognise a mythical $500 billion debt to the US and repay it through revenues from rare-earth metal sales – resources Ukraine does not even possess.
Zelensky’s firm stance, having twice refused to sign the agreement, yielded tangible results. On one hand, he failed to secure security guarantees from the US within the deal. On the other hand, the agreement’s focus shifted to the creation of a post-war reconstruction fund, into which Kyiv would allocate 50% of future revenues from mineral extraction from new deposits.
Although the agreement does not outline specific US investment commitments, the development of new mineral deposits is unlikely to begin without such investments. Opportunities for expanding mining operations in Ukraine and increasing exports to Western markets do exist, but at a significantly smaller scale than the declared fund size suggests.
In its current form, the agreement could turn out to be either a mere formality or a tool for pressuring Ukraine. However, under certain conditions and with goodwill, it could also become a viable investment mechanism for Ukraine’s mining sector and industry – or even an equivalent of the Marshall Plan for its post-war reconstruction.
This outcome would be possible if the US and, potentially, the EU contribute funds to the reconstruction fund, providing guarantees for investors. As part of its contribution, Ukraine proposes utilising frozen Russian assets.
Background of the deal: threats, chimera and shackles
Ukraine and the United States are set to sign the so-called rare-earth metals agreement today. Apparently, this will be preceded by a meeting between Donald Trump and Volodymyr Zelensky. However, the document, which now holds the status of a 'framework agreement,' will not be signed by the presidents themselves but by lower-ranking officials. That said, nothing can be taken for granted. Just yesterday, after talks with British Prime Minister Keir Starmer, Trump expressed full confidence in a positive outcome of his meeting with Zelensky and even praised him, despite wanting to cancel the meeting just a day earlier, and calling Zelensky a dictator who had squandered US aid only a week before.
The story of Trump’s latest 'deal' perfectly reflects his negotiating style and tactical arsenal. He first stated this expectation to receive $500 billion worth of rare-earth metals from Ukraine on 3 February, claiming this amount matched what the US had spent supporting Ukraine since the war began. However, neither of these claims had much to do with reality. According to calculations by the Kiel Institute for the World Economy, by 31 December 2024, the United States had provided Ukraine with less than $120 billion in aid, and not all of that money had actually reached Kyiv. Furthermore, Ukraine does not even have the rare-earth metal deposits that Trump was seeking in return
The topic of rare earth metals probably came up in Trump's rhetoric thanks to the so-called victory plan that Zelensky presented last year. The plan mentioned that Ukraine possesses ‘natural resources, including critical metals worth trillions of dollars’. Other Ukrainian officials have also told Western investors about valuable resources available for extraction in Ukraine. However, these claims are based on rough estimates made during the Soviet era, S&P Global notes. No modern assessments exist, a fact acknowledged by Roman Opimakh, former head of Ukraine’s State Geological Service, in an interview with the agency.
Trump’s mention of a potential ‘rare-earth metals deal’ with Ukraine coincided with behind-the-scenes consultations with Moscow on the possibility of direct, separate negotiations. The prospect of such an agreement between Kyiv and Washington appeared to be both a tool for pressuring Vladimir Putin and a justification for Trump – should he, contrary to his previous statements, need to continue supporting Ukraine due to the Kremlin’s unwillingness to compromise.
It is well known that Zelensky refused to sign the hastily drafted and substantively absurd agreement at least twice. On 12 February, when Trump unexpectedly called Putin, US Treasury Secretary Scott Bessent brought a draft of the agreement to Kyiv. A few days later, on 15 February, a revised version was presented to Zelensky on the sidelines of the Munich Security Conference. At a press conference on 23 February, Zelensky stated that the initial versions of the agreement required Ukraine to recognise a fictional $500 billion debt to the US for past aid. Additionally, he was dissatisfied with the fact that the document contained no security guarantees for Ukraine.
Trump unleashed a torrent of accusations and threats against Zelensky for refusing to sign the agreement immediately after concluding talks with Kremlin representatives in Riyadh on 18 February (interestingly, however, the amount of US aid to Ukraine had by then dropped to $350 billion). This reaction likely reflected his frustration with the results of the Moscow consultations and his need to reintroduce the threat of a deal with Kyiv as leverage against Putin. The day after Trump’s furious online attack against Zelensky – joined by Elon Musk – the US administration in Washington announced that it would present Ukraine with a new version of the agreement.
Zelensky's success: an ambiguous agreement instead of a colonial one
As the agreement was discussed and rewritten, it became clear that it was not about a colonial takeover of Ukraine’s natural resources, as some commentators had feared and as it initially appeared. Instead, it had transformed into a vague declaration of intent that could be used in various ways and for different purposes in the future. Nevertheless, it can be said that Zelensky achieved an impressive diplomatic success. The agreement could just as easily become an empty shell or a tool for pressuring Ukraine – or it could serve as a prototype for a Marshall Plan for the country’s post-war recovery.
The version of the agreement published on 26 February by the Ukrainian newspaper European Pravda outlines the creation of an Investment Recovery Fund, which will be jointly managed by Washington and Kyiv, although Washington will maintain full financial control over it. This marks a radical shift in the political outlook of the agreement. The document defines Ukraine’s 'recovery' as restoring its GDP to the level of late 2021 (its current GDP is estimated at approximately 80% of that figure). This provision establishes the agreement’s endpoint. The text states that Ukraine will allocate 50% of future revenues from mineral extraction – including oil and gas – at new deposits (an important distinction), as well as revenues from related infrastructure projects, such as LNG terminals.
The preamble acknowledges that the US has provided Ukraine with 'substantial military and material support' since Russia’s invasion, but it does not specify any amounts. The document also mentions the security guarantees Ukraine hopes to obtain but offers no details: 'The US government supports Ukraine’s efforts to secure the necessary guarantees for lasting peace. The participants will seek to determine any necessary steps to protect mutual investments.'
The agreement’s funding mechanism, relying on revenues from mineral extraction and sales, could place a heavy financial burden on Ukraine. The country does have natural resources, but not in abundance. This provision remains a remnant of the earlier myth of rare-earth metals. While Ukraine’s Geological Service cannot confirm their presence in significant quantities, the US Geological Survey does not include Ukraine in the list of countries with significant reserves of rare earth metals. The top positions in that ranking belong to China (44 million tonnes), Vietnam (22 million tonnes), and Brazil (17 million tonnes), while all other countries combined hold 29 million tonnes – of which 10 million are in Russia. (In a recent interview, Vladimir Putin smugly claimed that Russia possesses 'an order of magnitude more of such resources than Ukraine' and sarcastically suggested that Trump could mine them together with Russia on occupied Ukrainian territories).
However, even if Ukraine had substantial rare-earth reserves, turning them into $500 billion would be impossible. The total global market for rare-earth metals does not exceed $15 billion per year, points out Bloomberg columnist Javier Blas.
At one point, alongside ‘rare earth elements,’ Trump started referring to ‘critical minerals’. According to US law, these are any minerals that American authorities, based on recommendations from the US Geological Survey, currently classify as critical. The latest US list includes 50 minerals, while the EU has a similar list of 30. Ukraine has deposits of about 20 of these, but only three (titanium, lithium, and graphite) are found in significant quantities. Titanium is crucial for the aerospace industry, shipbuilding, and defense. Lithium and graphite are primarily needed for lithium-ion battery production. The exact share of these resources located in Russian-controlled territories is unknown. A rough estimate from the ‘We Build Ukraine’ project and Ukraine’s National Institute for Strategic Studies, cited by Reuters, suggests that around 40% of these deposits are under Russian control.
According to the US Geological Survey, as of 2021, Ukraine ranked among the world’s top ten countries in confirmed reserves of ilmenite and rutile, the main titanium-bearing minerals. However, its reserves are significantly smaller than those of leading producers. Ukraine has 5.9 million tonnes of ilmenite, whereas China has 210 million tonnes, and Australia 180 million tonnes. In 2021, Ukraine produced 430,000 tonnes of ilmenite – about 5% of global production. The total global ilmenite market that year was valued at $11 billion. Ukraine’s rutile reserves amount to 2.5 million tonnes, compared to 35 million tonnes in Australia, 7.4 million tonnes in India, and 6.9 million tonnes in South Africa. Ukraine produced 95,000 tonnes of rutile in 2021, making it the third-largest producer worldwide, accounting for 15% of global output – behind only Australia (200,000 tonnes) and Sierra Leone (120,000 tonnes). The global rutile market was valued at $3.9 billion in 2021.
The situation with graphite is similar. Estimates of Ukraine’s graphite reserves vary. Most sources suggest a maximum of 20 million tonnes – S&P Global for example, cites this figure. If accurate, Ukraine ranks among the top ten graphite-producing countries, though it still lags far behind leaders like China (78 million tonnes) and Brazil (74 million tonnes). GIn 2021, Ukraine’s graphite production was estimated at 17,000 tonnes, representing about 1.5% of the global market, which was valued at $16.5 billion that year. Ukrainian lithium reserves, according to Roman Opimakh, amount to 1% of global reserves and about one-third of Europe’s. If true, this means Ukraine has 0.28 million tonnes of lithium – a notable amount, but still modest compared to global leaders such as Chile (9.3 million tonnes) and Australia (6.2 million tonnes), according to expert assessments.
In other words, investments in the development and extraction of Ukraine’s mineral resources could be profitable and expand the country’s export potential in sectors critical to the EU and US It is also highly likely that confirmed reserves will increase as more exploration is conducted, along with Ukraine’s share of production and exports. However, the global market for these resources is only valued at around $40-50 billion, making the idea of funding a $500 billion recovery fund through mineral extraction looks like a complete chimera. The references to oil and gas likely hint at the potential for shale extraction in Ukraine – an issue that has been discussed for years but lacks well-developed economic projections.
A positive scenario: the Ukrainian Marshall Plan
In the version of the agreement reported by European Pravda, it no longer appears as a mechanism for repaying US aid but rather as an instrument for Ukraine’s post-war recovery. Under certain conditions, it could even work in Ukraine’s favor. This is suggested, in part, by the persistent mention of the $500 billion figure – roughly the amount the World Bank estimates will be needed for Ukraine’s reconstruction. According to the bank’s breakdown, $176 billion is required to cover direct damages, $84 billion for housing reconstruction, $78 billion for transportation infrastructure, $68 billion for the energy sector and extractive industries, $64 billion for trade and industry support, and over $55 billion for agricultural recovery.
A few days ago, Volodymyr Zelensky acknowledged progress in negotiations with Washington and outlined key conditions he will continue to seek. First and foremost, he wants Ukraine and the US to invest in the country’s reconstruction jointly, on a 50/50 basis. As part of Ukraine’s initial contribution, he proposed using a portion of Russia’s frozen central bank assets (potentially an immediate $50 billion). Additionally, Zelensky insists that the agreement include concrete security guarantees. Regarding resource revenues, Zelensky interprets them as licensing fees from mineral extraction rights. He stated that these licenses currently generate about 60 billion hryvnias ($2 billion) annually.
Ukrainian Prime Minister Denys Shmyhal also said that Ukraine is expecting ‘a cash contribution’ from the United States, which will be used for ‘security, economic development, and capital investments in infrastructure’. He also stressed that any agreement should not contradict Ukraine’s existing international commitments, particularly its Association Agreement with the EU. On the same day, European Commissioner for Industrial Strategy Stéphane Séjourné proposed drafting an agreement for joint mineral extraction between Ukraine and the EU.
Thus, on the one hand, in its current form, the framework agreement appears difficult to implement and could be used as a pressure tool against Ukraine, which has limited means to finance the proposed recovery fund. However, under the right conditions and with goodwill from all sides, it could be transformed into a highly beneficial mechanism for Ukraine’s recovery and economic integration. On the other hand, it could serve as a vehicle for investment in Ukraine’s mining sector. On the other, it could function as a guarantee fund for private-sector investments in reconstruction. Most likely, such a transformation would be possible if the EU were to join the agreement. Given the EU’s strong interest in shaping Ukraine’s recovery strategy and its willingness to share the financial burden, this could turn the agreement into a Ukrainian equivalent of the Marshall Plan for post-war Europe.