Trump administration hails new minerals deal with Ukraine

Senior US officials say the pact would empower US President in peace talks with Russia

US President Donald Trump and Ukraine's President Volodymyr Zelensky met in the Oval Office in February. AFP

President Donald Trump's administration hailed the signing of a new minerals deal with Ukraine as a “historic partnership” that will generate profits for both nations and strengthen Mr Trump's hand in negotiations with Russia.

Administration officials said the agreement, which was signed on Wednesday, grants the US preferential access to new Ukrainian minerals and natural resources licences. It also establishes an equal joint investment fund that would fund Ukraine's reconstruction as part of a US effort to end the war with Russia.

“This is not just rare critical minerals and many other items that have been highlighted in conversations around this partnership,” a senior US administration official told journalists on a call.

“This partnership is going to be fundamental to the peace process that the President is leading, because it sends a strong message to Russia that the United States has been in the game and has committed to Ukraine's long-term success.”

According to Ukrainian officials, the version of the deal signed on Wednesday is far more beneficial to Ukraine than previous versions, which they said reduced Kyiv to a junior partner and gave Washington unprecedented rights to the country’s resources.

Another US official explained that the pact has three agreements, a framework deal and two technical accords, and that they expect Ukraine's parliament to ratify the agreement next week.

Under the agreement, the US and Ukraine would each receive 50 per cent of royalties, licence fees and other revenue from the extraction of Ukrainian natural resources, including rare earth minerals, as well as oil and gas, the White House said.

Officials have not mentioned any explicit security guarantees in regard to any potential aggression from Russia, a demand that Ukraine had initially insisted on. The pact comes following the fraying of ties between Washington and Kyiv.

The now infamous exchange in the Oval Office. EPA

Mr Trump, who took office in January, campaigned on a promise to bring a swift end to the war in Ukraine and end US military aid. Overturning decades of US foreign policy, he has sought closer relations with Russia and berated Ukrainian President Volodymyr Zelenskyy on social media as well as in the Oval Office during an official visit.

The US President has argued that his predecessor, Joe Biden, grossly overspent American taxpayers' funds on supporting Ukraine throughout the war, now more than three years old. He pitched the minerals deal as a “payback” for military assistance.

“We'll move it and operationalise it as fast as we possibly can,” White House deputy chief of staff Stephen Miller said during a news briefing. “It's meant to pay back the United States, it is the key point for the hundreds of billions of dollars that our taxpayers have spent subsidising the war in Ukraine.”

Mr Trump's tone has shifted on Mr Putin in recent weeks, with the US President saying he was not happy with continued Russian missile and drone strikes on Kyiv and elsewhere, even while peace talks were in progress.

State Department spokeswoman Tammy Bruce said the deal would have a long-term positive impact for Ukrainians

“This deal that has just been signed is so critical in that it is going to be generational and it will make the difference for Ukraine at every stage,” she told reporters. "[It] provides a kind of national security that nothing else really could when it comes to the way the world views Ukraine.​"

But”the deal does not mention any explicit security guarantees to deter future Russian aggression that Ukraine has long insisted on. The US assumes that the mere presence of American workers in Ukraine will be enough to deter an attack by Russia on their location.

The fund will be supported by the government through the US International Development Finance Corporation agency, which Ukraine hopes will attract investment and technology from American and European countries.

Trump administration officials initially pushed for a deal in which Washington would receive $500 billion in profits from exploited minerals as compensation for its wartime support.

But Mr Zelenskyy rejected the offer, saying he would not sign off on an agreement “that will be paid off by 10 generations of Ukrainians.”

Any financial payoff from the minerals deal could take a decade or longer as investors face many hurdles to getting new mines into production in the war-ravaged country.

Developing mines that produce strategically important minerals in countries with established mining sectors such as Canada and Australia can take 10 to 20 years, mining consultants told Reuters.

Workers at an open-pit titanium mine in Ukraine's Zhytomyr region in February. AFP