- The US-Ukraine minerals deal grants US firms access to critical resources like graphite and lithium.
- But experts warn that commercial opportunities are limited, and certainly won't be immediate.
- Even if Ukraine could fast-track approvals, the ongoing war may deter investors, one expert told BI.
The US and Ukraine signed a deal this week granting US companies access to critical minerals like graphite and lithium in the war-torn country. But industry watchers say the deal's impact will be slow and limited.
The newly signed deal between the US and Ukraine — part of often-fraught negotiations between President Donald Trump and Ukrainian President Volodymyr Zelenskyy — gives US companies access to Ukraine's reserves of critical natural resources as part of a planned reconstruction fund.
It also aims, in part, to diversify supply chains and support US firms producing goods like solar panels and EV batteries.
In the past, Trump has said that the minerals deal with Ukraine could net the US $500 billion from rare earths alone.
But experts say the deal is more symbolic than practical — at least for now — due to security, investment, and logistical hurdles that dampen expectations for any near-term payoffs.
Timothy Puko, director of corporate commodities at the Eurasia Group, told Business Insider that any commercial outcomes from the deal are "severely limited."
"This is almost entirely about politics and keeping Washington interested," he said. "With very little there to lure in serious investment or production that could materially bolster supply chains."
Cullen Hendrix, a senior fellow at the Peterson Institute for International Economics, said the deal is "more smoke than fire" when it comes to reshaping US critical mineral supply chains.
However, he added that it "provides Ukraine with an important lifeline and, in theory, shields them from a mountain of post-conflict debt."
Transactional approach
The agreement between the US and Ukraine comes at a time of rising supply-chain uncertainty, amid an ongoing US trade war with China from which 90% of the world's rare earth metals are sourced.
But there are uncertainties over the available resources in Ukraine.
Erik Jonsson, a senior geologist at the Geological Survey of Sweden, told BI in March that "Ukraine has a solid mining industry, but it's not based on rare earths."
While the agreement gives the current administration political cover to continue backing Ukraine, Hendrix emphasized that it "won't markedly change" the US mineral security landscape in the short or medium term.
Scott Young, geo-technology director at the Eurasia Group, said that while Ukraine holds large deposits of critical minerals, there's nothing particularly distinctive about them.
"It's a question of extraction—and even more importantly, processing and refining," he added. "To extract, you need capital, permits, infrastructure, and a workforce to mine the raw ore profitably. And even then, the infrastructure to transport and process that ore may not be in place."
These constraints are compounded by volatile mineral prices and rising geopolitical tensions, particularly between the US and China.
Hendrix also cautioned against the assumption that identified resources will translate easily into viable reserves.
"Ask anyone in mining," he said. "Lots of things — logistics, prices, capital expenditures—can stall or kill projects."
Long lead times
Michelle Michot Foss, a minerals expert at Rice University's Baker Institute for Public Policy, told BI that without serious investment in extraction and processing, resources will remain untapped.
She called the new deal a "long-lead-time deal" fraught with "a multitude of risks and uncertainties that investors and policymakers will face."
And Foss pointed to past disappointments as a cautionary tale for those looking to get involved.
"Ukraine promoted their shale plays years ago, and companies positioned with licenses," she said, referring to Chevron and Shell's shale gas projects launched in 2013.
However, lackluster drilling results and political instability halted both efforts.
Young said that permitting is the biggest bottleneck for most mining companies, and even if Ukraine could fast-track approvals, the ongoing war with Russia could deter investors who operate on multi-decade timelines.
"The mismatch in timing and the volatile geopolitical environment will likely put downward pressure on near-term interest from cautious foreign investors," he said.
