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DATE: 03/06/2025
Jonathan G. Browning | Chief Strategy Officer | Hornet Corporation, Tennessee
Ukraine’s Rare Earth Reserves: A Geopolitical Tug-of-War
The global rare earths supply chain is undergoing a seismic shift, and Ukraine has found itself at the epicenter of a geopolitical battle for control. The United States, aiming to reduce its dependence on China for critical minerals, is actively pursuing a deal with Ukraine to tap into its untapped rare earth reserves. However, Russia has complicated matters by offering the U.S. a stake in rare earth extraction within the Ukrainian territories it controls.
Ukraine's Strategic Rare Earth Potential
Ukraine is home to approximately 5% of the world’s rare earth reserves, making it a key player in the evolving mineral supply chain. With China dominating global rare earth production—producing nearly two-thirds of the world’s supply—the United States is seeking alternative sources to mitigate supply chain vulnerabilities. Ukraine, despite its ongoing conflict, presents an opportunity for Washington to establish a new foothold in the critical minerals sector.
For weeks, U.S. negotiators, led by President Donald Trump, have been in discussions with Ukrainian President Volodymyr Zelensky. The proposed deal, reportedly valued at nearly one trillion dollars, is being positioned as a form of economic reciprocity for the military aid provided by the U.S. to Ukraine since the 2022 Russian invasion. While Trump has cited varying figures—ranging from $350 billion to $500 billion—Ukraine maintains that U.S. assistance amounts to closer to $100 billion. Regardless of the discrepancy, rare earth access has become a focal point of the ongoing negotiations.
Russia’s Unexpected Proposal
Adding another layer of complexity, Russian President Vladimir Putin has extended an offer to the United States for joint ventures in rare earth extraction within Russian-occupied Ukrainian territories. According to reports, Russia currently controls roughly 20% of Ukraine’s land, including significant deposits of rare earth elements in Donbas and Crimea. With approximately 50% of Ukraine’s known rare earth reserves now under Russian control, Putin’s offer presents an unusual diplomatic twist.
Kirill Dmitriev, Putin’s special envoy for investment, has openly stated that Russia is willing to collaborate on rare earth extraction and energy-related projects. This unexpected development has sparked debate among U.S. policymakers, given that Washington has been actively working to counter Russian influence in Ukraine. Despite the U.S.'s recent vote alongside Russia in the United Nations against condemning Moscow's actions in Ukraine, it remains uncertain whether Washington will entertain Putin’s proposal.
The Global Rare Earths Landscape
Rare earth elements, comprising 17 critical metals such as dysprosium and neodymium, are crucial to various industries, including defense, aerospace, and electric vehicles. The United States Geological Survey estimates that global rare earth reserves total approximately 110 million metric tons (MT), with the largest deposits found in China (44 MT), Brazil (22 MT), and Vietnam (21 MT). Russia holds around 10 MT, while India possesses approximately 7 MT.
Despite its substantial reserves, Ukraine has yet to develop a significant rare earth production or processing infrastructure. Unlike China, which not only mines but also processes the majority of the world's rare earths, Ukraine lacks the capacity to refine and distribute these critical materials. This presents an additional challenge for the U.S.-Ukraine deal, as any extraction efforts would require substantial investment in processing capabilities.
Breaking Free from China’s Dominance
China’s dominance in rare earth production stems from its ability to control both extraction and processing. Mining these materials is a resource-intensive process involving extensive chemical treatment, which generates toxic waste. Many nations, including the U.S., have been reluctant to invest in large-scale rare earth production due to the associated environmental and economic costs.
Given these constraints, Washington has actively sought to diversify its rare earth sources. Trump’s previous discussions about acquiring Greenland were rooted in similar motivations, as the region holds significant deposits of rare earth minerals. Meanwhile, the U.S. currently produces only about 11.6% of the world's rare earth supply, ranking second to China. Myanmar, another key producer, contributes roughly 8% of the global supply.
The Road Ahead
As negotiations between the U.S. and Ukraine reach a critical juncture, the geopolitical implications of this rare earths deal cannot be understated. If finalized, the agreement could serve as a significant step toward reducing U.S. dependence on China’s supply chain. However, Russia’s competing proposal adds a layer of unpredictability to the equation.
About the Author
Jonathan Browning, Chief Strategy Officer at Hornet Corporation, brings extensive experience in strategic planning, operations management, and stakeholder relations. With a focus on innovation and emerging technologies like AI and blockchain, Jonathan drives growth and operational excellence while championing American energy independence.
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