Agreement between Ukraine and the USA on mineral natural materials

osw.waw.pl 2 months ago

Analysis

2025-05-06

Agreement between Ukraine and the USA on mineral natural materials

Mr Marcin Jędrysiak

Sławomir Matsusak

On 30 April, Deputy Prime Minister and Minister of Economy of Ukraine Julija Swyridenko and U.S. Treasury Secretary Scott Bessent signed an agreement to make an American-Ukrainian Investment Fund for Reconstruction. The fresh institution will be liable for raising capital for the long-term reconstruction and modernisation of Ukraine and will finance infrastructure, energy and mineral projects. It is to be created by the U.S. improvement Finance corp (DFC) and the Ukrainian Public-Private Partnership Agency (APPP). Both entities are to enter into an additional agreement, the "limited partnership agreement", which will indicate the detailed conditions for the management and financing of the Fund.The value of the U.S. contribution to the Fund will include, among another things, the estimated value of the fresh military aid granted by Ukraine in any form (both arms and ammunition supplies as well as training organised). Most likely this means that Kiev will gotta contribute the equivalent of future American support to the Fund. The Ukrainian contribution is to cover 50% of gross from concession fees, licences, production divided agreements for fresh (or inactive) mining projects for uncommon earth metals, strategical metals (including uranium, titanium and lithium), precious metals, oil and natural gas (total of 57 minerals and natural materials, but may besides cover other, not included in the agreement, minerals and hydrocarbons, if the parties so agree). The agreement requires ratification of the ultimate Council of Ukraine, which will most likely happen on 8 May.

The agreement is primarily political: it involves Kiev's efforts to keep U.S. engagement in Ukraine – especially as a military aid provider, including on commercial terms (the signed paper permits specified eventuality). In a number of key passages, it refers to a future "limited partnership agreement", the content of which remains unknown. This prevents a precise assessment of the benefits and risks for Kiev in the long term. At the same time, it should be remembered that investments in fresh natural materials extraction in Ukraine will be a process extended for many years.

Comment

Signing a contract that culminates in a nearly three-month negotiation process, allowing the parties to announce success. It besides removes 1 of the most problematic issues from the agenda of bilateral relations. Kiev managed to avoid taking into account Washington's most unfavourable proposals, especially the designation of the existing financial assistance (provided in the form of grants) and military debt of Ukraine. It is besides a success to treat the value of any future U.S. military aid as a contribution to the Fund, as in many cases (especially in air defence and intelligence) Kiev has no alternate to the United States. At the same time, the agreement does not supply any safety guarantees for Ukraine,On which Volodymyr Zelenski had previously made its conclusion dependent (see Trump–Zelenski: rhetorical escalation).
Without cognition of the content of the "limited partnership agreement" to be concluded, the signed paper cannot be decently assessed. In many places, including how the Fund is financed, there are references to its provisions. According to Ukrainian politicians in the media, the text of the additional agreement has already been agreed but is not available to the public. In addition, the Fund's Statute is to be signed as a third. Both will not require parliamentary ratification – will be concluded at DFC and APPP levels. This means that the ultimate Council of Ukraine will vote on the ratification of the Joint Fund Agreement without knowing the key aspects of the agreement governing its functioning. The fact that the Ukrainian authorities do not decide to make them public may mean that there are provisions that are detrimental to Kiev.
In the short term, the agreement will have limited economical relevance. The vast majority of the natural materials covered by the agreement, Ukraine does not extract or extract them, are kept low (see Annex). Most of the deposits there are hard to operate and require costly infrastructure, which could take years. In turn, estimates of the natural materials were made inactive in russian times, so they may be out of date - it will be essential to re-examine the geological resources.

ANNEX

Mineral natural materials in Ukraine

Within internationally recognised limits Ukraine has large deposits of natural resources, nevertheless their exact value remains unknown – information on the size of deposits deemed strategical is covered by state secrecy and frequently based on old, yet russian data. Estimates of their values scope from $2 trillion to $26 trillion.

According to the Ukrainian Forbes estimates of 2023, most of the values are accounted for by coal (62%) and iron ore (12%), which are not covered by the signed contract. At present, uncommon earth metals (such as scand, tantalum, cert) are not produced on an industrial scale from reasons for their tiny resources. In Ukraine, however, there are minerals of critical importance for the economy, specified as lithium, uranium or titanium.

70% of Ukrainian minerals are located in 3 circuits: Donetsk, Djepropetrovsk and Lugansk. Peas the deposit is now under Russian business – most of all, a large part of the resources of lithium, zirconium, graphite, gas and coal. Russia is profiting from the extraction of any of the above mentioned minerals.

Ukraine continues to control the deposits of any possibly attractive investment natural materials. At times, however, crucial logistical and method problems are encountered:

Whereas the exploitation of Ukrainian high-quality beryllium deposits is harmful to the environment and its decks are partially within the limits of the nature reserve; whereas, for this reason, it is not presently mined despite the issue of appropriate permits;
Ukraine has 10% of the world's kaolin stock – in 2021, the extraction of this natural material amounted to 1.6 million tonnes, representing 3.6% of planet production;
The Ukrainian lithium deposits are estimated at 500 000 tonnes, but the level of extraction is marginal. The decks are hard and costly in operation due to the request to build mine shafts.In addition, Ukrainian lithium is mainly a alleged petalite which is not utilized for the production of automotive batteries;
Ukraine has the largest stocks of manganese ore in the planet (2.16 billion tonnes, i.e. 42% of planet stocks); 3.8 million tonnes were mined in 2021.
Ukraine has 12 nickel deposits (estimated around 218 000 tonnes), but any of them are besides tiny to be of economical importance. For this reason, the operation presently only covers the larger decks. For akin reasons cobalt is not extracted;
in 2019, the mining of tantalum was authorised, but the procedure for its annulment is presently in advancement and the metallic is so not operated;
Titanium mining takes place only on 10% of the full Ukrainian deposits of this natural material; the operation of the remaining would require large investments due to the request to build mine shafts. In 2021, Ukraine gained 525 000 tonnes of titanium, giving it sixth place in the world;
Uranium extraction in Ukraine is costly due to the depth of the deposits, so it is not widely exploited. Its pre-war production did not let to cover up to 50% of national demand. In 2022, 100 tonnes of uranium were extracted in Ukraine;
19.12 billion m were mined in Ukraine in 2024³natural gas, which represents an increase of about 2% compared to the erstwhile year (18.78 billion m)³). The level of extraction of this natural material is somewhat lower present than before the war (19.8 billion m)³). Gas stocks in the areas controlled by Kiev are estimated at 680 billion m³, but in 2025 the Russians made many attacks on mining infrastructure, which could lead to deterioration of the results in this year;
Oil extraction in Ukraine reached 2.1 million tonnes in 2023 (not yet known for the year 2024) and 1.65 million tonnes in 2021, 68% of which were collected in the east of the country. During the war, however, fresh wells began to be conducted, allowing this problem to be addressed. full oil stocks in the occupation-free areas are estimated at around 107 million tonnes.