U.S.-Ukraine Reconstruction Investment Fund: what to expect from the “Minerals deal”?

Last week, the Ukrainian parliament adopted the required amendments to the Budget Code for the implementation of the US-Ukraine Reconstruction Investment Fund, also known as the “Minerals deal”, signed on April 30^th . While detailed terms await to be set out in a separate agreement, let’s explore the implications for both parties and the perspectives regarding the ongoing war with Russia.

Terms of the agreement

The deal involves joint ownership and management over a reconstruction investment fund, which will collect and reinvest revenues contributed to the fund and will earn income from the future commercialization of Ukrainian natural resources assets. The United States will support Ukraine in the extraction and commercialization of its minerals and in return, the U.S. firms will be granted priority access to develop and process critical minerals.

The scope of the fund applies to newly exploited deposits only and covers 57 mineral types, including: lithium, titanium, cobalt, graphite, uranium, rare-earth elements (REE). Gas, oil and other hydrocarbons are also included. Furthermore, the deal does not include any payback for the U.S. aid granted to Ukraine since February 2022; a payback initially demanded by President Trump.

Benefits for both parties 

Concerning Ukraine, the country will retain full ownership and control over its resources, a sovereignty that was not guaranteed in the first round of negotiations; and would become a key player in the global supply chain for critical minerals. Furthermore, Ukraine will benefit from the U.S. guidance and technologies in the exploitation of these resources, providing employment and revenues more than welcomed in a postwar reconstruction era. Finally, the deal should not restrain Ukraine from its European ambitions and the United States are open to revisiting some terms of contract in case of additional obligations as part of joining the EU.

Through this bargaining, Trump’s administration attained two objectives: cover the costs of the U.S. aid towards Ukraine and relieve the U.S. industry from Chinese-dependence on REE and minerals. Indeed, China represents about 70% of minerals global production and uses its near-monopoly situation as a commercial leverage. For instance, in April China imposed exports restrictions on seven REE in response to U.S. tariffs.

Perspectives on the conflict

Despite President Zelensky’s demands, the agreement does not mention an explicit security guarantee by the United States. In fact, for President Trump, the mere presence of American contractors in the country will act as a security guarantee, deterring another aggression.

However, whilst the deal looks to the future, the current situation on the battlefield is still disastrous and the politico-diplomatic level remains at a dead-end despite mediatized marginal advances. As illustrated by the latest news, on the one hand war prisoners are being exchanged while on the other hand massive drone attacks are being launched; and no ceasefire, let alone a peace agreement, seems to be possible under both parties’ conditions.

Indeed, the “Minerals deal” did not alter Moscow’s strategic scheme. At the peace talks hosted in Istanbul early June, the Russian memorandum stipulated that a settlement of the war was still conditioned to an international recognition of Crimea and four other occupied regions as Russian territory (Luhansk, Donetsk, Zaporizhzhia and Kherson), and therefore a withdrawal of all Ukrainian forces from these regions. In addition, Russia required a halt in foreign military and intelligence aid, presidential and parliamentary elections in Ukraine; but also required that the country’s membership to NATO be ruled out and that Russian be an official language. Unsurprisingly, these conditions were rejected by the Ukrainian side.

Furthermore, the recent announcement by US Defense Secretary Pete Hegseth of a reduction in military aid to Ukraine in the proposed 2026 defense budget as part of a strategic shift refutes the initial assumption that the U.S. had taken sides following the “Minerals deal” signature. In fact, Trump’s administration still aims to de-escalate the conflict through diplomacy but also further implicate and rely on NATO’s European allies, while shifting the US resources towards the Indo-Pacific region and meeting domestic calls for fiscal restraints.

Hence, the U.S.-Ukraine “Minerals deal” is not assessed to have a significant impact on the current peace process and will most likely not lead to a short-term resolution of the conflict, nor to the United States taking a stand in favor of Ukraine on behalf of their agreement.

Overview of Ukraine’s resources

According to the World Economic Forum, Ukraine owns an estimated 5% of the world’s raw materials (of which only 15% were exploited before the war), including: graphite, titanium, lithium, beryllium, uranium, copper, lead, zinc, silver, nickel, cobalt, manganese. These materials are critical to various industries such as new technologies, energy and defense. For instance, graphite and lithium are key components of batteries, beryllium and uranium are used in nuclear weapons and reactors, while REEs are used in electronics, weapons and wind turbines.

As it can be observed on the map below from the Ukrainian Geological Survey, the State service of geology and mineral resources, part of the country’s resources are located in regions annexed by Russia. Their future exploitation will therefore be closely tied to the outcome of the peace settlements; yet, it is rather unlikely that Russia will concede to surrendering these territories given the economic leverage.

If the U.S.-Ukraine Reconstruction Investment Fund represents an opportunity of long-term strategic autonomy and revenues for both Ukraine and the United States, the implementation of the agreements’ provisions will face different levels of challenges over time. Indeed, the war with Russia is still ongoing and peace talks have taken a step back with no acceptable options from both protagonists and massive drone attacks during the past week. Until a peace settlement is reached and some semblance of stability brought back to this war-torn country, the exploitation projects might not attract investors. Furthermore, many of Ukraine’s deposits are not proven to be economically viable. The former general director of Ukraine Geological Survey declared that no modern assessments of REE has been made and the existing maps are 30 to 60 years old, based on Soviet old exploration methods. Assuming that the deposits are viable, these projects could still take 10 to 20 years to become operational and profitable. 

Decoding geopolitics isn’t a job. It’s survival.

Joy