The Jeddah Meet Paving the Way Ahead: The US, Ukrainian and Saudi officials held a successful meeting in Jeddah on March 11, 2025, following the disastrous meeting between Trump and Zelenskyy less than two weeks ago. This meeting comes at a critical stage where the Kursk counter-offensive is taking shape and Ukraine’s drone rain intensifying. A joint statement stated that the United States agreed to resume military aid and intelligence sharing with Ukraine after Ukraine said it was ready to support Washington’s proposal for a 30-day Phase 1 interim ceasefire with Russia. It is hoped that Russia will agree to frame the next phase to lasting peace. Russian President Vladimir Putin has said he is open to discussing a peace deal, but he and his diplomats have repeatedly stated they are against a temporary ceasefire and would seek a deal that safeguards Russia’s long-term security. Ukraine and the US have also agreed to conclude the minerals deal as soon as possible. According to the Institute for the Study of War, a US-based conflict monitor, Russia currently occupies about 99% of the Luhansk region and 70% of the Donetsk region, as well as roughly 75% of both the Kherson and Zaporizhzhia regions.
Peace Plan and the Hidden Agenda of Mineral Deal
Trump’s peace plan is more business-oriented to stop endless defence expenditure in Ukraine and gain access to minerals in Ukraine and business for its contractors in the reconstruction phase. It is less moralistic and more a business plan with the centrality of MAGA. President Donald Trump aims to secure preferential access to Ukraine’s extensive mineral reserves, positioning the United States to reduce its reliance on Chinese imports and bolster its technological and defence sectors. It marks a transition from military escalation, which it ignited, to conflict management by economic stranglehold to overcome its strategic dependencies and vulnerabilities to China. The focus is China, not Russia or Ukraine. Ukraine is in any case the puppet at the receiving end both by Russia and now the US, with Europe looking to extract its pound of flesh.
The Contours of the Possible Mineral Deal
The preliminary agreement envisages that an ‘investment fund’ would be set up for Ukraine’s reconstruction and would manage the fund on ‘equal terms’. Ukraine would contribute 50% of future proceeds from state-owned mineral resources, oil and gas to the fund, and the fund would then invest in projects in Ukraine itself. Trump said the US had given Ukraine between $300 billion (£237 billion) and $350 billion (£276 billion) in aid, and that he wanted to ‘get that money back’ through a deal.
Zelenskyy has been concerned about the need for firm security guarantees for ‘lasting peace‘ in the light of doors to NATO membership being closed. Trump has stated that Ukraine would get ‘the right to fight on’ in return for access to its minerals and suggested the US would continue to supply equipment and ammunition ‘until we have a deal with Russia’. Yet he also stated that a mineral deal alone could deter future Russian aggression, which remains ambiguous.
A joint statement after the March 11 Jeddah meeting says the United States will resume military aid to Ukraine after Ukraine said it was ready to support Washington’s proposal for a 30-day Phase 1 interim ceasefire with Russia. It is hoped that Russia will agree to frame the next phase to a lasting peace
However, the deal’s attractiveness and strategic value and its implementation are fraught with many complexities ranging from extraction effort and cost-benefit to an actual survey of Ukraine’s mineral wealth and the issue of one-fifth of Ukraine under Russia with rich mineral resources too.
US Dependence on China for Rare Earth Material
China is responsible for nearly 90% of the global processing of rare earth minerals. The United States trade war with China is largely handicapped by the enormous dependency on China for rare earth minerals, critical for many high-tech industries including defence, alternative energy, and civil industry. China controls most of the world’s rare earth mining and refining. China supplies nearly 78% of the rare earth elements to the US. The US military relies almost entirely on China for rare earth materials – the F-35 fighter jet and Aegis destroyer both use large quantities of rare earth elements. This creates both dependencies and vulnerabilities to the US at a stage when its potential and primary threats emerge from China. The US is also vulnerable to supply disruptions and price fluctuations in its trade wars. The US is also disadvantaged in industries like electric vehicles and battery technology. To overcome this, the US government has increased funding for domestic rare earth firms and incorporated rare earth projects into its Defence Production Act. The Ukraine rare earth barter option thus assumes strategic importance.
Ukraine’s Abundant Mineral Treasure
Ukraine is blessed as the second largest nation in Europe with a God-gifted geography with two seas, and rich soil making it the bread basket of the world. But beneath its surface lies one of the world’s most remarkable geological formations, the ‘Ukrainian Shield’ – a massive crystalline block formed 2.5 billion years ago, representing one of Earth’s oldest continental blocks. This block has undergone several geological processes, creating favourable geological conditions for forming several mineral deposits including lithium, graphite, manganese, titanium and rare earth elements. Ukraine has deposits containing 22 of 34 critical minerals identified by the European Union as essential for energy security. This positions Ukraine among the world’s most resource-rich nations.
The abundance of mineral resources in Ukraine makes the country an important global player in mining operations. The nation contains almost 8000 mineral deposits from 90 different elements, wherein 20 deposits are seen as commercially viable. Ukraine has deposits of 22 of the 50 minerals listed as critical by the US, some of these deposits are in areas under Russian occupation.
Ukraine’s large iron-and-steel industry progresses from iron ore mining operations that concentrate near Kryvyy Rih, Kremenchuk, Bilozerka, Mariupol, and Kerch areas. One of the richest areas of manganese-bearing ores in the world is located near Nikopol. Bituminous and anthracite coal used for coke are mined in the Donets Basin. Lithium has been identified primarily around Mariupol in the Donbas region, these deposits hold promise for the burgeoning battery industry. Graphite, Titanium, and Uranium are critical minerals essential for various high-tech and defence applications, and are also in abundance in Ukraine.
As global demand for rare earth minerals escalates to meet the demands of the defence industry, renewable energy and electric vehicles, the strategic importance of Ukraine’s potential to supply these materials offers an opportunity for the West to reduce dependence on China and diversify their supply chains.
China supplies nearly 78% of the rare earth elements to the United States. The US military relies on China for these products – the F-35 fighter jet and Aegis destroyer use large quantities of rare earth elements. This makes the US vulnerable against China at a stage when its potential threats emerge from China
Strategic Implications
The proposed deal could involve the US obtaining exclusive mining rights to certain Ukrainian mineral resources, with Ukraine allocating a portion of its state-owned natural resource revenues to a dedicated investment fund. This arrangement aims to facilitate Ukraine’s reconstruction and economic development post-conflict. Yet to balance Russia’s interest, it confirms Ukraine’s entry into NATO is not feasible and as also future military aid and weapons are unlikely.
The United States: For the United States and its allies, securing access to Ukraine’s mineral resources aligns with broader economic and geopolitical influence by strengthening ties with Ukraine to counterbalance Russia, economic investment in Ukraine to boost economic growth and most importantly diversify and reduce present dependency on China for its critical rare earth minerals.
European Union’s Position: The European Union has more than a moralistic and a Russian-psyched disposition, an economically vested pie share in Ukraine’s mineral resources, particularly for its energy transition and hi-tech industries. The formation of an exclusive agreement between the United States and Ukraine will likely prompt the European Union to explore new alliances or more aggressively pitch in for a chip in the Ukrainian mineral wealth share. This could lead to exposing the emerging fault lines between the United States and the European Union, revealing new global power dynamics under Trump.
Russia: Maintaining control over the occupied territories allows Russia to exploit valuable resources, strengthen its economic position, and provide leverage in geopolitical negotiations. Russian President Vladimir Putin has said that Moscow was ready to work with American companies and attract foreign partners to mine rare earth mineral deposits in both Russia and parts of Russian-occupied Ukraine.
Challenges and Hurdles
Despite the perceived benefits, the path ahead is fraught with challenges that could impede the desired outcomes:
- Uncertain Valuation of Ukraine’s Mineral Wealth: Most of the data on Ukraine’s mineral wealth is based on Soviet-era surveys, which may be outdated to correctly reflect current reserves and cost of extraction. Notably, only about 8,000 of Ukraine’s 20,000 surveyed mineral deposits have been deemed viable for development.
- Investment and Infrastructure Cost: Estimates suggest that the ten largest mining projects would require approximately $15 billion in investment, covering the construction of mines, quarries, and processing facilities. The cost and complexities of virgin extractions remain unknown and challenging. Also, infrastructure to process from crude to usable form is lacking in Ukraine, demanding additional facilities by the US to be established. This would have cost and time penalties.
- Environmental and Regulatory Hurdles: Any mining operation, particularly in a war-torn country, will have several environmental and habitat degradation concerns impacting the population and future generations. These could have complexities, legalities and costs.
- Mineral Wealth in Russian Controlled Territories: Estimates indicate that Russia controls energy reserves, metals, and critical minerals including Lithium and Titanium, with a net worth of at least $12.4 trillion in these areas. The availability of these to Ukraine in the deal is certainly non-existent as much as the return of captured territory.
Estimates indicate that Russia controls energy reserves, metals, and critical minerals including Lithium and Titanium, with a net worth of at least $12.4 trillion in the areas it has occupied. The availability of these to Ukraine in the deal is certainly non-existent as much as the return of captured territory
Prognosis: A Peace Pact Leading to a Trump Card or a Strip Bargain?
The minerals deal between the US and Ukraine could really help America rely less on Chinese minerals and also strengthen the US economic ties with Ukraine, a crucial ally in the area that helps to counterbalance Russia’s influence. Yet, several complexities and dynamics raise challenges about the economic wisdom and strategic payoffs of this deal.
Should the deal navigate these hurdles through prudent and well-considered investments, technological infusion, and geopolitical manoeuvring, balancing the Russian and EU interests, the agreement could be a strategic trump card. Conversely, if these challenges become roadblocks, the deal might transform into a costly gamble, strategically embarrassing both the US and Ukraine.
The author, a PVSM, AVSM, VSM has had an illustrious career spanning nearly four decades. A distinguished Armoured Corps officer, he has served in various prestigious staff and command appointments including Commander Independent Armoured Brigade, ADG PP, GOC Armoured Division and GOC Strike 1. The officer retired as DG Mechanised Forces in December 2017 during which he was the architect to initiate process for reintroduction of Light Tank and Chairman on the study on C5ISR for Indian Army. Subsequently he was Consultant MoD/OFB from 2018 to 2020. He is also a reputed defence analyst, a motivational speaker and prolific writer on matters of military, defence technology and national security. The views expressed are personal and do not necessarily carry the views of Raksha Anirveda
