Explained: Ukraine’s rare earth minerals, proposed US deal and why Zelenskyy rejected it

Ukrainian President Volodymyr Zelenskyy has reportedly rejected a proposed US agreement that would give American companies access to Ukraine’s rare earth minerals, saying the deal was too focused on US interests and lacked security guarantees for Kyiv.

The proposal, a key topic in Zelenskyy’s talks with US Vice President JD Vance at the Munich Security Conference on Friday, sought to use Ukraine’s mineral wealth as “compensation” for past and future US military aid, Associated Press reported quoting senior Ukrainian officials familiar with the negotiations.

However, Zelenskyy reportedly declined to approve the agreement, citing concerns that it failed to offer protections against future Russian aggression.

What are Ukraine’s rare earth minerals?

Ukraine possesses vast reserves of critical minerals such as lithium, gallium, and titanium, which are essential for aerospace, defence, and nuclear industries. The country’s ilmenite deposits, used in titanium production, are particularly valuable and could help the US reduce its reliance on China and Russia for these strategic materials.

Despite this potential, Ukraine’s mineral industry remains underdeveloped due to ongoing conflict and complex state policies. Mining operations in the country’s east have been disrupted by the war, and much of the mineral-rich land is either unexplored or too close to the front line for development.

The proposed US-Ukraine deal

The US proposal, presented by Treasury Secretary Scott Bassent during his visit to Kyiv on Wednesday, outlined plans for American companies to invest in Ukraine’s mining sector. In exchange, Ukraine would continue receiving US military support, effectively tying economic cooperation to security assistance.

The Trump administration, which has expressed reluctance to continue large-scale financial aid to Ukraine, viewed the minerals agreement as a way for American taxpayers to “recoup” some of the funds already sent to Kyiv. White House National Security Council spokesperson Brian Hughes said stronger US-Ukraine economic ties would serve as a “guarantee against future aggression.”

However, Ukrainian officials raised concerns that the deal did not include concrete security commitments to deter Russian military actions.

Hughes criticised Zelenskyy’s rejection of the proposal as “short-sighted.”

Why did Zelenskyy reject the deal?

Zelenskyy said he blocked the signing of the agreement because it did not adequately protect Ukraine’s interests.

“For me, it is very important to connect security guarantees with investment,” Associated Press quoted Zelenskyy as saying.

A former senior Ukrainian official went further, calling the proposal a “colonial agreement”.

What’s next?

While the current US proposal has been shelved, discussions on cooperation in the mining sector are expected to continue. Ukrainian officials have signalled willingness to explore partnerships, provided they include security assurances. American companies, meanwhile, are likely to assess whether they can operate in Ukraine’s volatile environment and navigate its complex regulatory framework.