Trump says minerals deal with Ukraine is worth billions. Is it?

Ukraine might have turned the tide in its rocky relations with the U.S. by offering President Donald Trump’s administration access to its critical minerals as part of wider peace negotiations, but experts warn that question marks remain around the value and accessibility of such deposits.

Ukraine’s president, Volodymyr Zelenskyy, is set to travel to Washington on Friday for a potential signing of a deal with Trump that would see Kyiv and the U.S. jointly develop and monetize Ukraine’s deposits of rare earths, critical minerals, oil, gas and other natural resources.

Trump previously said he saw the deal as compensation for the U.S.’ aid to Ukraine throughout the war with Russia, and had claimed the deal was worth $500 billion.

Speaking Thursday, the U.S. president also said the economic pact would serve to prevent further Russian aggression. “We are a backstop because we’ll be over there, we’ll be working in the country. That’s a great thing economically for them,” he said in the Oval Office.

The “framework agreement,” as Ukraine described it on Wednesday, however, made no mention of the $500 billion figure or the wider value of the deal. Ukraine has already heavily disputed it owes the U.S. such a sum.

That Ukraine has “significant deposits of rare earths,” as the United Nations states, is not generally disputed. The country is seen to be a treasure trove of deposits of rare earth metals such as lithium and cobalt — widely used in rechargeable batteries for electronic devices — as well as scandium (an alloying agent with aluminum), graphite (used in the production of electric vehicle batteries), tantalum (also used in electronic devices), and niobium, which is used to make steel lighter and stronger.

“About 5% of all the world’s ‘critical raw materials’ are located in Ukraine, which occupies only 0.4 per cent of the Earth’s surface,” Ukraine’s deputy minister of environmental protection and natural resources, Svetlana Grinchuk, said in 2022.

Analysts say there are many unanswered questions on the size of Ukraine’s rare earths and strategic minerals deposits, however, as well as how accessible they are given Russia’s occupation of a swathe of Ukraine and the massive reconstruction process the country will face postwar.

They also question the ultimate value of a U.S.-Ukraine agreement given changing demand for such natural resources.

Nataliia Shapoval, head of the KSE Institute, a think tank within the Kyiv School of Economics, which has compiled a database of Ukraine’s critical minerals, said that Trump’s demand for $500 billion worth of deposits was “theoretically possible.”

“I think there will be some alignment to this figure that Trump mentioned,” Shapoval told CNBC via video call earlier this month. However, she questioned the validity of some of the current Soviet-era valuations.

“Other estimates are still confidential,” she continued. “There, the numbers are lower and may be not in the trillions.”

Complicating matters, however, is the location of Ukraine’s mineral wealth, with most situated in the largely Russian-occupied territories of Luhansk and Donetsk, in eastern Ukraine, as well as central Dnipropetrovsk, and the southern and also partly Russian-occupied area of Zaporizhzhia.

Not only is an active war raging in those areas, making access contingent on the outcome of the war and any subsequent peace deal, but they are heavily mined, making extraction in the future very difficult.

There’s been a lot of buzz about Ukraine’s rare earth minerals, but the country does not in fact have large quantities of rare earth elements, according to experts at the Atlantic Council.

“What it has instead is significant reserves of titanium, graphite, and lithium, which are foundational resources for the U.S. defense industry and wider high-tech economy,” Reed Blakemore, director of research and programs at the Atlantic Council’s Global Energy Center, commented online Wednesday.

But accessing these minerals, along with other reserves of aluminum and hydrocarbons, will hinge on the outcome of the ongoing war, he noted.

“A significant portion of these resources, both active and underexplored, are in the eastern third of Ukraine,” Reed said.

Geopolitical expert Robert Muggah, founder of consultancy the SecDev Group and a frequent commentator on Ukraine’s critical minerals, noted earlier this week that while Ukraine may be an attractive proposition for investment partners looking to monetize its critical minerals “actually getting it out of the ground is an entirely different matter.”

“Russia currently occupies over 60% of Ukrainian coal mines, and a share of caesium, lithium, manganese and rare earth deposits [which] potentially denies revenue to Ukraine and deepens Russian influence across supply chains,” he said on X.

Even after the minerals are extracted there will be additional obstacles to overcome.

“China remains far and away the dominant market force in minerals refining and processing,” the Atlantic Council’s Reed noted Wednesday.

“For a deal to really de-risk the U.S. minerals supply chain, more infrastructure is likely needed to ensure that the newly acquired mineral ores don’t flow toward Beijing.” Currently, he said, “the United States lacks the infrastructure to transport and refine these ores in Europe or North America at scale.”

— CNBC’s Karen Gilchrist contributed to this report.