Ukraine has agreed to sign off on a third version of a minerals deal with the US after Washington softened the terms, the Financial Times reported on February 25.

A key concession by Washington was to withdraw its initial demand for $500bn in compensation, which according to Ukrainian officials cited by the Financial Times, cleared the way for the agreement. The officials also said that they had secured more advantageous terms in the negotiations.

The finalised agreement, dated February 24 and seen by the FT, still contains a provision for a fund into which Ukraine will allocate 50% of revenues from the future monetisation of state-owned mineral resources, including oil and gas, as well as associated logistics.

The previous agreement, dated February 21, did not specify a timeline for contributions to the fund, but did say they had to continue until a total of $500bn had been paid in. That provision has now been removed as has a provision that said the governing law would be courts in New York.

Notably, the agreement excludes existing mineral resources that currently contribute to Ukraine's state budget, and so will not cut into existing budget revenues. The major national energy companies such as Naftogaz and Ukrnafta, which are amongst the biggest taxpayers in the country, have been excluded from the deal.

Nevertheless, Bankova will be disappointed as the deal does not offer any US security guarantees, which has been a key demand by Ukrainian President Volodymyr Zelenskiy.

Asked what Ukraine receives in return from the deal at a press conference on February 25, Trump replied that it gets $350bn, plenty of military equipment, and the “right to fight on.” However, the draft copy of the deal seen by the FT and Tymofiy Mylovanov, rector of the Kyiv School of Economics (KSE), makes no mention of arms supplies or fresh funding for the Ukrainian government. It seems likely that Trump was referring to what he claims the US has already sent to Ukraine over the last three years. According to Bankova, the US Congress pledged $177bn, but only sent a total of $67bn in military aid and $31.5bn in budgetary support since the war started.

Zelenskiy is expected to fly to Washington on February 28 to sign off on the agreement. Bankova’s relations with the Trump administration got off to a rocky start in the first weeks thanks to missing money, delayed arms deliveries and demand for mining deals dominating the agenda. It got worse last week when a war of words broke out between Trump and Zelenskiy who accused each other of being a “dictator”  and living in a Russia “disinformation bubble" respectively.

REM confusion 

Much confusion surrounds the deal, as Ukraine does not have any large deposits of raw earth metals (REMs) although it does have considerable strategically important mineral resources. China is the world’s leader in REM reserves with 44mn tonnes of deposits, according to the US Geological Service, and it also accounts for between 80-95% of the current global production.

Russia has the fourth largest reserves of 10mn tonnes, following Vietnam (22mn tonnes) and Brazil (21mn tonnes). The US is seventh with 1.8mn tonnes, according to USGS. Ukraine’s reserves of REMs do not feature on the ranking of reserves of any reputable geological service.

However, Russian President Vladimir Putin claimed on February 24 that Russia has twice as much, and total REM reserves of 28mn tonnes, according to the Russian Ministry of Natural Resources, which would give Russia the second largest REM reserves in the world.

"Russia is one of the undisputed leaders in these rare earth metal reserves. We have them in the north, in Murmansk, and in the Caucasus, in Kabardino-Balkaria, and in the Far East, in the Irkutsk region, in Yakutia and Tyva [Republics]," Putin said in conversation with VGTRK journalist Pavel Zarubin.

The total reserves of 29 types of strategic metals existing in Russia amount to 658mn tonnes, TASS reported this week referring to data from the Russian Ministry of Natural Resources, of which 28.5mn tonnes are the rare earth metals. (The ministry is counting only the 15 lanthanum metals that fill the eighth row of the periodic table, whereas a broader definition of rare earth metals includes three more elements in column three.)

“The total reserves of rare metals (that is, all 29) in Russia currently amount to 658mn tonnes. These reserves are sufficient both for the current needs of the Russian economy and for the long term,” a ministry report said.

Putin held a meeting on the development of the rare earth metals industry on February 24, as the Kremlin tried to steal Ukraine's REM thunder and tempt Trump into a deal with Russia. Putin said that Moscow is "ready to work with Washington on rare earth metals," including in the "new regions" in Ukraine that Russia annexed in 2022 that are home ot much of the reserves Zelenskiy just sold to America. 

He has also offered to work with Americans to produce aluminium and supply the US with 2mn tonnes of the metal a year. The US currently covers 60% of its needs with domestic aluminium production and imports the rest, of which Russia supplied 4.3mn tonnes in 2023.

Putin has also said that Russia is willing to work with Americans to develop its substantial lithium deposits. Ukraine is home to the largest lithium deposits in Europe, which is a crucial component in battery production, however its 500,000 tonnes of reserves is half that of Russia’s and currently it produces only small amounts of concentrate.

There is confusion over the value of Ukraine’s mineral deposits. US senator Lindsey Graham claimed that Ukraine’s “rare earth metal” reserves are worth between $2-$7 trillion dollars in an interview with Fox News at the end of last year. But the current global production of REMs is worth only $15bn, according to Bloomberg columnist and commodities expert Javier Blas.

If Trump had struck the same deal for 50% of China’s revenues generated from the sale of REMs, then it would take 71 years to amass $500bn in the proposed fund. And China is already in production. Almost all of Ukraine’s deposits remain untouched in the ground. Ukraine earned a mere $100mn from the exports of minerals in 2024, according to bne IntelliNews estimates. The new deal does not make clear where the tens of billions of dollars of investment will come from to build the mines and large-scale processing plants needed to exploit and realise the value of those strategically important minerals.