US, Ukraine sign rare earth elements deal

(From left) US President Donald Trump and Ukrainian President Volodymyr Zelensky meet on the sidelines of Pope Francis’s funeral at St Peter’s Basilica at the Vatican on April 26. FILE PIC/AFP

After months of tense negotiations, the US and Ukraine signed a deal that will give Washington access to the country's critical minerals and other natural resources, an agreement Kyiv hopes will secure long-term support for its defense against Russia. Ukrainian officials said, the deal signed on Wednesday is far more beneficial to Ukraine than previous versions, which they said reduced Kyiv to a junior partner and gave Washington unprecedented rights to the country's resources.

The deal now needs to be ratified by the Ukrainian parliament. It would establish a reconstruction fund for Ukraine that the country hopes will be a vehicle to ensure future American military assistance. A previous agreement was nearly signed before being derailed in a tense Oval Office meeting involving US President Donald Trump, US Vice President J D Vance and Ukrainian President Volodymyr Zelensky.

What does the deal include?

The deal covers minerals, including rare earth elements, but also other valuable resources including oil and natural gas. It does not include resources that are already a source of revenue for the Ukrainian state. In other words, any profits under the deal are dependent on the success of new investments.

While Trump has repeatedly expressed interest in Ukraine's rare earth elements, it unclear what other minerals might be part of the deal. Earlier this year, Andrii Yermak, the head of Ukraine's presidential office, said it could include lithium, titanium or uranium. The agreement ensures full ownership of the resources remains with Ukraine, according to Ukrainian officials. The state will determine where and what can be extracted.

Ukraine's rare earth elements are largely untapped because of state policies regulating the industry, a lack of good information about deposits, and the war.

Working of fund

The agreement establishes a reconstruction investment fund, and both the US and Ukraine will have an equal say in its management, according to Svyrydenko. The fund will be supported by the US government through the US International Development Finance Corporation agency, which Ukraine hopes will attract investment and technology from American and European countries.

Ukraine is expected to contribute 50 per cent of all future profits from government-owned natural resources into the fund. The US will also contribute in the form of direct funds and equipment, including badly needed air defense systems and other military aid. Contributions to the fund will be reinvested in projects related to mining, oil and gas as well as infrastructure. No profits will not be taken from the fund for the first 10 years.

What are rare earth elements?

They are a group of 17 elements that are essential to many kinds of consumer technology, including cell phones, hard drives and electric and hybrid vehicles. China is the world's largest producer of rare earth elements, and both the US and Europe have sought to reduce their dependence on Beijing.

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