Ukraine-US minerals deal faces long road to profits amid ongoing war

A new minerals deal between Ukraine and the US is expected to take at least a decade, or longer, before it yields significant financial returns, as investors face numerous challenges in developing mines in the war-torn country.

Mining consultants highlighted that the development of strategically important minerals in countries with established mining industries like Canada and Australia can take 10 to 20 years, Caliber.Az reports via foreign media.

However, Ukraine's mineral deposits remain largely unexplored, with insufficient data to confirm their economic viability. Investors are also wary of committing funds to a nation where infrastructure, such as power and transport, has been severely damaged by Russia’s ongoing invasion, and where future security is uncertain.

“If anyone’s thinking suddenly all these minerals are going to be flying out of Ukraine, they’re dreaming,” said Adam Webb, head of minerals at Benchmark Minerals Intelligence. “The reality is it’s going to be difficult for people to justify investing money there when there are options to invest in critical minerals in countries that are not at war.” 

Despite these challenges, Ukrainian officials view the deal as a political breakthrough, expecting it to strengthen US support for Kyiv, which had faltered under President Trump. Ukraine relies heavily on US aid, including weapons and financial support, to combat Russia’s invasion. 

The US government, which has been a strong advocate of the deal, sees potential in accessing Ukraine's rare earth element deposits—key materials used in everything from electronics to electric vehicles. 

However, the deal does not yet specify financial terms, and both sides must finalise a limited partnership agreement to move forward. While the deal covers 55 minerals, including rare earths, lithium, and nickel, significant hurdles remain, including security risks in Russian-occupied territories where some of the most valuable deposits lie. 

“The deal ties the U.S. more closely into Ukraine,” Webb noted, adding that the US now has a vested interest in ending the war to unlock these assets.

Earlier, Ukraine’s First Deputy Prime Minister and Minister of Economy, Yuliia Svyrydenko, announced that under the agreement, Ukraine will contribute 50 per cent of all revenues from new rent and new licenses for mineral extraction on newly designated sites to the bilateral investment fund being established. Both the US and Ukraine will have equal voting rights in the management of the fund.

The deal does not entail any direct debt obligations for Ukraine to the US. For the first ten years of operation, the fund will not distribute dividends; instead, all earnings will be reinvested within Ukraine. The investments will focus on the development and processing of mineral resources, as well as the improvement of infrastructure.

By Naila Huseynova