Ukraine President Volodymyr Zelensky, right, and U.S. President Donald Trump, discuss making a deal in St. Peter’s Basilica in Vatican City, on April 26. The agreement will see the two countries create a jointly managed fund to exploit Ukraine’s natural resources.The Canadian Press
On the morning of Pope Francis’s April 26 funeral, U.S. President Donald Trump and his Ukrainian counterpart, Volodymyr Zelensky, sat alone on two red chairs, facing one another, in the largely empty St. Peter’s Basilica. At the time, the topic of the impromptu mini-summit amid the baroque opulence of the Vatican was not known.
Less than a week later, all became clear. The two leaders were wrapping up the fraught Ukraine-U.S. minerals deal, discussions of which had sometimes been ill-tempered and explosive since Mr. Trump’s election campaign in the fall. On Thursday, in his evening address from Kyiv, Mr. Zelensky said, “In fact, now we have the first result of the Vatican meeting, which makes it truly historic.”
The deal was done – finally. It had been signed the day before in Washington by U.S. Secretary of the Treasury Scott Bessent and Ukraine’s Minister of Economy, Yulia Svyrydenko. The agreement will see the two countries create a jointly managed fund to exploit Ukraine’s natural resources. Ukraine’s contribution will be 50 per cent of future revenues generated by income on new extraction licences for various resources. The U.S. contribution will take the form of direct funding or future military assistance for Ukraine, or a combination of both.
The minerals deal has evolved over time. There is less to it than meets the eye, though it can be labelled a political victory for both countries. At minimum, it shows that the Trump administration is willing to work with Kyiv, perhaps to the point of supplying the Ukraine military with weapons in exchange for mineral rights, even if there is no specific security promise.
At first, the deal was all about supplying “rare earths” to the American industrial and military machine. The term refers to a family of 17 elements – among them promethium, erbium and cerium – that are crucial to the efficient functioning of lasers, batteries, magnets, fibre optics, medical contrasting agents, control rods in nuclear reactors and other specialized devices. They are more thinly spread than actually scarce, requiring the processing of vast amounts of ore to produce small amounts of the metals in pure form.
Rare earths are a minor obsession for Mr. Trump, no doubt because their processing and supply are dominated by China. Enter Ukraine. For some reason, Mr. Trump was convinced that Ukraine is a rare-earths treasure trove. In February, he said that Ukraine has “very valuable rare earths.” He told Ukrainian officials that he wanted “$500-billion worth of rare earth” from the country at war with Russia.
Never mind that there is little to no evidence that Ukraine is brimming with rare earths, though it does have scandium, which is used in aluminum alloys. The U.S. Geological Survey, one of the world’s leading science agencies for earth, water and biological resources, does not even show Ukraine as having any reserves of rare earths. It lists the U.S., Australia, Brazil, Canada, China, India, Russia and Vietnam among the countries with the biggest reserves.
Bloomberg reported that no database used in the mining industry lists Ukraine as a rare-earths player.
The rarity of rare earths in Ukraine may have sunk into the White House’s geo-economic minds in recent weeks, along with the high cost of building plants to process them into metals that can be sold. The Ukraine mineral narrative has changed to embrace more prosaic resources, notably oil, natural gas and coal, which Ukraine does have in fairly large amounts (especially gas), with the bonus of a vast network of pipelines to deliver the fuel to European markets.
Ms. Svyrydenko seemed to confirm the shift in extraction strategy. In an April 30 tweet, she said, “The fund will then invest in extraction projects for critical materials, oil, and gas – as well as in related infrastructure and processing.”
The inclusion of oil and gas in the Ukraine minerals deal makes no sense on one level. The U.S. is sitting on vast quantities of both hydrocarbons. It is the world’s biggest oil producer, thanks to the shale revolution, and has been a net exporter of oil and refined products for several years. It is also the biggest exporter of liquefied natural gas. The U.S. has no need for Ukraine’s fuels, or anyone else’s, to power its economy.
On another level, the grab makes enormous sense. The market for hydrocarbons is enormous compared with the one for rare earths. The Geological Survey noted that in 2024 the U.S. imported only US$170-million of rare-earth compounds. Various reports say the global market for the metals is worth a mere US$6-billion. The global market for crude oil alone is worth more than US$2-trillion.
There is no comparison. If the U.S. wants Ukrainian commodities that it can find and sell easily and quickly in large quantities, they are looking at oil and gas. Forget rare earths – the Ukraine minerals deal looks simply like an oil and gas grab by Mr. Trump.
Editor’s note: A previous version of this article incorrectly stated Scott Bessent is the U.S. Secretary of State. He is Secretary of the Treasury. This version has been updated.