America has just tried to grab Ukraine’s vast mineral wealth

THE AMERICAN demand was brutal. President Volodymyr Zelensky had hoped to present his offer to give America access to Ukraine’s rare minerals directly to Donald Trump. When America’s treasury secretary, Scott Bessent, turned up in Kyiv a few days ahead of this weekend’s Munich Security Conference, Mr Zelensky then hoped he’d be talking about continued financial support. Instead, the Ukrainian president unexpectedly found himself presented with a memorandum. The proposal demanded his country’s mineral wealth in its entirety. Mr Zelensky had “an hour” to agree, according to three sources with knowledge of the exchange.

Unaccustomed to such blunt treatment, the Ukrainian president declined, and pushed the discussion to the Munich conference. There, the Americans pressed once more, demanding Ukraine pledge “$500bn worth” of natural resources as a back payment for military aid supposedly already delivered. By the end of Saturday, February 15th, the Ukrainian team had negotiated a stay of execution, and agreed to start a process of negotiation. At a press huddle in Munich, Mr Zelensky cautioned that the American proposal contained none of the security guarantees that Ukraine needs. “We can think about how to divide resources once security guarantees are clear,” he said.

The idea of opening up Ukraine’s rare-earth minerals to American companies originated in Mr Zelensky’s “victory plan”, a five-point vision he presented to then-President Joe Biden and candidate Mr Trump in October. The plan included a quid pro quo: Ukrainian resources in return for America helping Ukraine to build what it called “non-nuclear strategic deterrence”. The Biden administration viewed the plan as wildly unrealistic, not least its request for Tomahawk cruise missiles, and rejected it. Mr Trump, as it now transpires, was more enthusiastic about the idea, though he appears to have read only its first half.

Sitting on a geologic rock shield the size of Britain—it stretches from near the Belarusian border in the north-west to the Donbas in the east—Ukraine is thought to hold vast reserves of rare-earth minerals, now vital to high-tech manufacturing. The geology suggests rich deposits of beryllium, graphite, hafnium, germanium and gallium, which are used to make semiconductors, batteries, reactors and other high-tech equipment such as medical imagers. For the Trump administration, the main draws appear to be titanium and lithium.

Ukraine already supplies 4-7% of the world’s titanium, used for paint dyes and aerospace manufacturing, and holds as much as 10-20% of global reserves. The ore is mined from Soviet-era mining towns like Irshansk in Zhytomyr province.

There are meanwhile four known deposits of lithium, critical for electric-vehicle battery production, within the territory Ukraine still controls. The most useful of these deposits, however, is located in Shevchenkivske in Donetsk province, just 5km from the current front line. Another sits in Berdiansk in Zaporizhia province, which is under Russian occupation. The Economist understands Russia may have offered a backchannel proposal to the Trump team for access to those resources.

Ukrainian metals like titanium could help America reduce its reliance on China and Russia. But extracting from new sites will require serious investment—and not all of it will be cost-effective. Knowing where to dig will be difficult enough. Little has been surveyed since the dissolution of the Soviet Union 30 years ago, says Elijah Kravchuk, a geologist. “Ukraine might say it can offer everything to [America], but it doesn’t actually know what is located here.” Further complications take the form of local oligarchs, some of whom already have stakes in the field; slow Ukrainian bureaucracy; and the fact that much information about the industry is still a state secret.

It is not immediately clear how Ukrainian law might allow for American control over mineral resources. According to the constitution, these belong to the Ukrainian people. A senior Ukrainian official says that one way might be to issue bonds and to create a new holding company—not the American government—to oversee extraction. Andriy Nikolayenko, an MP and former industry insider who leads the parliamentary group on critical metals, suggests the complicated process might end up underpinning Ukraine’s basic interests. Extracting Ukraine’s mineral wealth will require a significant, multi-year investment from any prospective American partner, he says, and that is an investment in the country’s security. “This is not a shop you can build in a week.”

All of this means that even if Ukraine does agree to Mr Trump’s demands, it will be some time before the American president could begin to see a dividend. “A very-best-case scenario for new extraction projects would be the end of his four-year term,” says Mr Nikolayenko. “That’s not to say that existing projects couldn’t be taken away from oligarchs, though they might have something to say about that.”

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