Ukraine, US finalize deal to develop natural resources

Ukraine and the U.S. are close to sealing a deal to develop difficult-to-extract earth minerals, according to Prime Minister Denys Shmyhal.

Titled “Agreement on Establishing Rules and Conditions for the Ukraine Reconstruction Investment Fund,” the document is directly tied to security guarantees and the creation of a “reconstruction investment fund,”, Shmyhal said.

“Neither the president nor the government will consider this agreement separately from security guarantees for Ukraine,” he said.

The Ukrainian government will review the agreement text with the U.S on Feb. 26 and Ukrainian President Zelenskyy’s office has announced he could visit Washington as early as Feb. 28 to sign the deal.

However, the Financial Times reports that the Feb. 24 agreement does not include references to the U.S. security guarantees that Kyiv had initially insisted on in exchange for signing the deal.

The agreement outlines the creation of a fund, to which Ukraine will contribute 50 percent of its revenue from the “monetization” of natural resources like oil, gas, and critical metals. 

Ukraine sits on one of the world’s biggest deposits of graphite, a third of all European lithium, and supplied 7 percent of the world’s titanium before Russia’s full-scale invasion. 

“The mineral agreement is only part of the larger picture. We’ve heard from the U.S. administration that this is part of a broader framework,” said Olha Stefanishyna, Ukraine’s deputy prime minister and justice minister.

The fund will only receive money from newly developed natural resources. 

The document leaves open questions about the U.S. share in the fund and the conditions of “joint ownership,” which will be addressed in subsequent agreements. Kyiv and Washington. will jointly manage the fund, with the U.S. having decision-making power under its own laws, according to Ekonomichna Pravda.

The agreement also prohibits the sale or transfer of shares in the fund without mutual consent. 

The U.S. has committed to providing financial assistance to Ukraine, the amount of which will be decided separately. The fund may cover Ukraine’s expenses for new projects, with funds reinvested into Ukraine’s economy at least once a year.

The two sides will discuss the agreement, which officials from both Ukraine and the U.S. have approved and recommended for signing. For it to be finalized, Zelenskyy must secure approval from the Ukrainian parliament.

The idea to jointly extract minerals first emerged in Zelenskyy’s victory plan, which he presented to allies starting in October. 

It suggests Ukraine’s closest allies should get “a special agreement for the joint protection of the country’s critical resources”, including “natural resources and critical metals worth trillions of U.S. dollars, including uranium, titanium, lithium, graphite, and other strategically valuable resources.”