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Dino Mazzone, Associé Principal
Gattuso Bouchard Mazzone LLP
Montreal, Canada
[email protected]
On April 30, 2025, the United States and Ukraine signed a transformative agreement that could reshape global supply chains for critical minerals and bolster Ukraine’s postwar recovery. The United States-Ukraine Reconstruction Investment Fund, as the deal is formally known, marks a strategic partnership aimed at unlocking Ukraine’s vast mineral wealth, strengthening Western economic security, and reducing dependence on China’s mineral dominance.
A Joint Vision: Structure and Purpose
At the heart of the agreement is a jointly managed investment fund, structured as a 50/50 partnership between Washington and Kyiv. Both countries will make equal financial contributions and share revenues from new projects. The fund’s primary focus is on developing Ukraine’s largely untapped reserves of critical minerals – including rare earth elements, titanium, lithium, graphite, nickel, and cobalt-resources essential for advanced technologies, renewable energy, and defense systems.
Ukraine retains full ownership and control over its resources, including decisions on extraction sites and methods. Profits will be based on the success of new investments and, notably, the deal does not impose any debt obligations on Ukraine for prior US support. Instead, it is designed to attract global investment, facilitate reconstruction, and provide the US with a secure, alternative supply of minerals vital to its industries and military.
Key Provisions of the Agreement
- Investment and Recovery: The agreement is intended to accelerate Ukraine’s economic recovery following Russia’s invasion, while also drawing in international investors and technology partners.
- Revenue Sharing: The US will receive a share of future revenues from new mineral extraction projects (in fact, no profits will be taken from the fund for the first 10 years). Ukraine will contribute 50% of royalties from newly-issued licenses for critical minerals, oil, and gas exploration to the fund. The US will also contribute to the fund in the form of direct capital and equipment.
- Military and Economic Support: While the deal unlocks some immediate military support for Ukraine (e.g. potential air defense systems), it does not include explicit US security guarantees or commitments for further military aid.
- Strategic Significance: The partnership is both symbolic and practical, signaling a long-term US commitment to Ukraine’s sovereignty and prosperity, and aiming to reduce Western reliance on China for critical minerals.
Geopolitical Stakes: Challenging China’s Dominance
China currently dominates the global rare earths industry, producing over two-thirds of the world’s rare earth minerals and processing nearly 90% of them. These 17 elements are indispensable for modern technologies, from smartphones and electric vehicles to advanced military hardware. Beijing’s control over these supply chains grants China significant leverage, particularly over the US and its allies.
Recent months have seen a sharp escalation in trade tensions. After the US announced new tariffs in April 2025, China retaliated with export controls on rare earth minerals and magnets, effectively halting shipments to major economies such as the US, Japan, and Germany. This move exposed the West’s vulnerability and underscored the urgency of diversifying supply sources.
Implications and Challenges
The US-Ukraine deal is a direct response to China’s near-monopoly and recent export restrictions, aiming to secure alternative sources for critical minerals and reduce Western dependence on Beijing. By tapping into Ukraine’s mineral wealth, the US seeks to bolster its own technology and defense sectors, while supporting Ukraine’s economic stability and reconstruction. This being said, significant investment in Ukraine infrastructure and security will be required before large-scale extraction can begin.
Looking Ahead: Expanding the US Minerals Strategy
The United States is not stopping with Ukraine. Negotiations are underway for a minerals-for-security agreement with the Democratic Republic of Congo (DRC), a country with some of the world’s largest reserves of cobalt, copper, lithium, tin, and tantalum. The DRC has been destabilized by ongoing conflict, and its mineral-rich eastern provinces are currently contested by rebel forces. In early 2025, DRC President Felix Tshisekedi proposed granting the US access to these resources in exchange for military assistance to restore stability, a move Washington sees as another opportunity to diversify critical mineral supply chains and further reduce reliance on China.
Conclusion: A Strategic Pivot
The US-Ukraine critical minerals agreement represents a pivotal shift in global resource politics. It is a long-term investment in Ukraine’s future and a calculated move to shore up Western supply chains against Chinese dominance. As the US pursues similar partnerships in Africa and beyond, the race for critical minerals is set to redefine alliances, economic strategies, and (frankly) the balance of power this century. The success of these efforts, however, will hinge on Ukraine’s security situation and the ability to attract and sustain large-scale investment and development.
