Ukraine and US agree to minerals deal ahead of Zelensky Washington visit

Ukraine said the US dropped a demand for a right of up to $500bn in revenue from the mineral resources. The US and Ukraine have agreed to terms of a rare earth minerals deal after days of tension between Donald Trump and Volodymyr Zelensky. Kyiv is ready to sign the agreement on jointly developing Ukraine’s mineral deposits, including oil and gas, after the US dropped demands to a right of up to $500bn in revenue from the resources, according to sources close to negotiations.

Mr Trump last week demanded preferential access to the $500bn figure as repayment for Washington’s military support for Ukraine under his predecessor Joe Biden. Follow updates here. Mr Zelensky rejected the proposal as “not serious”, saying there was no factual basis for claiming the US was owed that money, as well as the deal providing Ukraine with no security guarantees.

He also claimed Mr Trump was living in a “Russian disinformation bubble”, which was met with fury from the US president and senior White House officials. Mr Trump called Mr Zelensky a “dictator” and his national security advisor Mike Waltz warned him to “tone it down”, saying the deal was the “best security guarantee” Ukraine could hope for.

But Ukrainian officials say they have now negotiated far more favourable terms and depicted the deal as a way of broadening the relationship with the US, despite it still lacking security guarantees. However, future weapons shipments are still being discussed between Washington and Kyiv, a source familiar with the deal said.

“The minerals agreement is only part of the picture. We have heard multiple times from the US administration that it’s part of a bigger picture,” Olha Stefanishyna, Ukraine’s deputy prime minister, told the Financial Times. Mr Zelensky will travel to Washington DC on Friday to meet with Mr Trump, after US and Kyiv’s officials advised the deal should be signed.

The final version of the agreement would establish a fund into which Ukraine would contribute 50 per cent of proceeds from the “future monetisation” of state-owned mineral resources, according to the FT. It is unclear what the size of the US stake in the fund would be, and the terms of “joint ownership” deals will be hashed out in follow-up agreements.

Ukraine is sitting on one of Europe’s largest deposits of critical minerals, including lithium and titanium, much of which is untapped. According to the Institute of Geology, Ukraine possesses rare earth elements such as lanthanum and cerium, used in TVs and lighting and neodymium, used in wind turbines and EV batteries.

It also has erbium and yttrium, whose applications range from nuclear power to lasers. The EU-funded research also indicates that Ukraine has scandium reserves but detailed data is classified. Mr Zelensky has been trying to develop these resources, estimated to be worth more than £12 trillion, based on figures provided by Forbes Ukraine, for years.

In 2021, he offered outside investors tax breaks and investment rights to help mine these minerals. These efforts were suspended when the full-scale invasion started a year later. Anticipating that transactional-minded Mr Trump might take an interest in this, Mr Zelensky placed the mining of these minerals into his victory plan, which was drawn up and presented to Mr Trump last year.

A little over £6 trillion of Ukraine’s mineral resources, which is around 53 per cent of the country’s total, are contained in the four regions Mr Putin illegally annexed in September 2022. That includes Luhansk, Donetsk, Zaporizhzhia and Kherson, although Kherson holds little value in terms of minerals.