World
February 26, 2025 09:00
washington/kiev - US and Ukraine reach agreement on rare earth metals supply, impacting tech industry and US defense sector.
US-Ukraine Agreement on Rare Earth Metals
Ukraine and the United States have finalized a deal for the supply of rare earth metals, crucial for the tech industry and US defense. The initial agreement involved weapons in exchange for rare earth metals, but has now shifted towards economic investments. This comes as Ukraine's key demand for security guarantees against Russian aggression is no longer part of the deal.
President Trump's administration does not view Russia as the aggressor, which has influenced the negotiations. Trump even accused Ukraine of starting the war and labeled President Zelensky as a dictator. Consequently, military aid to Ukraine has been off the table, with Trump asking for previous aid to be repaid, creating long-term debt concerns for Zelensky.
However, the recent removal of this repayment demand paved the way for the deal. While specifics are yet to be disclosed, reports suggest Ukraine will receive economic support from the US in exchange for rare earth metals. US Treasury Secretary Scott Bessent emphasized that the deal signifies a commitment to invest heavily in Ukraine's economic future, offering an economic security guarantee.
Trump's move aligns with President Zelensky's strategy of sharing Ukrainian resources with allies, as demonstrated in his plan presented to global leaders last December. Ukraine's significant resources, including lithium, uranium, titanium, and graphite, are of interest to the US. These resources are crucial for products like smartphones, magnets, electric vehicles, and defense systems.
China currently dominates the rare earth metals market, producing 70-80% of the global supply. The US's reliance on Chinese resources, despite strained relations, underscores the strategic importance of diversifying sources. Ukraine's abundant resources, particularly concentrated in the eastern regions of Donetsk and Zaporizhia, have geopolitical implications, with the occupied territories serving as key hubs for these valuable minerals.
Among the minerals, lithium and graphite are essential for batteries, an industry where the US heavily depends on imports. Ukraine possesses significant lithium reserves, ranking among Europe's largest, and is a top-five global graphite reserve holder. Additionally, uranium, crucial for nuclear energy and defense applications, is another key resource where Ukraine ranks in the top ten globally.
The US, the largest producer of nuclear energy, aims to secure its uranium supply amid rising nuclear threats. While currently importing uranium mainly from Australia, Kazakhstan, and Canada, Ukraine's substantial uranium reserves make it a valuable ally in this regard. However, recent developments indicate that Washington may not be directly involved in Ukraine's uranium endeavors, despite the shared interests.