In just a few short weeks of Donald Trump’s return to the U.S. presidency, the war in Ukraine has descended into haggling over where the United States will mine rare earth metals. Kyiv has proposed its own territory, hoping to receive both money for its economic recovery and U.S. security guarantees in return. Moscow has responded with counter-proposals, pointing out that it has “significantly larger resources” than Ukraine, including in regions it has annexed from Ukraine.
All of this has been greeted with great enthusiasm by Trump himself, who is confident that a rare earth metals deal “would be very good for world peace and lasting peace.” For many reasons, however, the implementation of any agreement in this area is in practice impossible until a lasting peace is established.
Trump’s enthusiasm is understandable. The seventeen rare earth elements are crucial for the production of virtually every high-tech product, from electric cars and solar panels to reusable rockets and aircraft. And right now, more than 70 percent of U.S. imports of rare earths come from China.
Washington has tried to overcome this dependence in recent years and significantly increased its own production of rare earths. But with consumption growing too, the overall balance didn’t change. Beijing still controls 60 percent of the global production of rare earths and 90 percent of their global processing, so there is simply no alternative.
The United States has not yet been able to reduce its dependence on Chinese rare earths for several reasons. First is the nature of U.S. deposits. Despite their name, rare earths are quite common, but their extraction only becomes commercially viable when they reach concentrations of about 2 percent per ton of waste rock, which happens relatively rarely. The United States has about 1.9 million tons of confirmed reserves, while Russia has 3.8 million tons, but both of these figures pale in comparison with China’s 44 million tons. In China, both the total volume and the concentration of these resources per unit of rock are higher.
Second, the extraction and processing of rare earth metals is an incredibly capital-intensive process, requiring at least $500-700 million in initial investment, without taking into account associated activities. At the same time, the prices for many of the elements are fairly volatile, and extraction projects for virtually all other resources have a shorter and easier payback period. This is why 84 percent of all global rare earth projects in 2024 were financed by governments, and not by private companies.
Third, rare earth metals only occur as complex multi-component ores that are very difficult to separate. That process requires specific technologies, in which hardly anyone except China has invested in the last thirty years. The Chinese leadership has always seen rare earth metals as a way to gain access to technology and was ready to pay any price for that, whether financial, social, or environmental. As the former Chinese leader Deng Xiaoping famously said, “The Middle East has oil, and China has rare earth metals.”
Finally, rare earth mining can cause serious environmental damage. The most common way to separate the rare earths for commercial use is to leach them with extremely strong acids. The world's largest deposit, Bayan Obo in China’s Inner Mongolia region, is one of the most polluted places on Earth. The water, air, and soil there are completely contaminated with heavy metals, acids, and radioactive isotopes. Given the obvious social costs of such pollution, until very recently, when relatively clean technologies began to appear, it was all but impossible to develop these industries in Western democracies.
The nature of rare earth metals mining means it is unrealistic for the United States to undertake such work in Russia or Ukraine in both the short and even medium term. In Ukraine, most of the deposits are either under Russian control or in direct range of Russian artillery. Even if that territory is miraculously recaptured, without guarantees of long-term peace, the risks involved in developing the deposits will be unacceptable for commercial investors.
The big question is whether or not the U.S. government will be prepared to invest. Should a stray missile hit a U.S. facility in the Kharkiv region, for example, Washington will face the dilemma of whether to view that as an attack on the United States and to respond accordingly. That’s a situation the U.S. government has spent the last few years trying diligently to avoid.
Even in the event that a long-term peace agreement is somehow reached, there will still be plenty of problems. Mining and processing rare earth metals is extremely energy-intensive, and Ukraine’s energy infrastructure has been decimated by Russia in the three years of war, meaning it is certainly not up to the challenge. Each project would therefore require its own electrical power plant, which will drive costs up even further.
In addition, the agreements being discussed do not contain any U.S. security guarantees for Ukraine that could form the basis of a long-lasting peace. “I’m not going to make security guarantees beyond very much. We’re going to have Europe do that,” Trump has said. Yet the implementation of any U.S.-Ukrainian rare earths deal would in practice depend on being able to count on Ukrainian security. In other words, Trump wants to rake in the profits from Ukrainian resources while expecting Europe to spend money guaranteeing the security of U.S. mines and factories.
Putin’s proposed rare earths deal with Russia also entails seemingly insurmountable problems. The United States could in theory invest in Russian deposits far from the front lines, but that would immediately raise questions about accessibility (they are very far from major trade routes), access to technology (they are all currently under sanctions), and, most importantly, property rights. It’s hard to imagine anyone being willing to invest a billion dollars in a country that has nationalized dozens of foreign investors’ assets in the last three years with little or no compensation.
Putin’s proposal also amounts to stabbing Beijing in the back, after the key role China has played in stabilizing Russia’s economy during the war. It’s hard to believe that the Russian president would risk losing Moscow’s main ally for the sake of the Trump administration—an anomaly in the American political landscape—when it’s entirely possible that the next president will disavow his predecessor’s most objectionable decisions, which would undoubtedly include such a deal with Russia.
So far, all the ideas for developing rare earth metals that have issued forth from Moscow and Kyiv in recent weeks appear to be aimed purely at obtaining tactical advantages that can later be exchanged during the negotiations. We may even see some ceremonial signings of memoranda. But there is no doubt that they will soon be forgotten. Projects for developing rare earth metals can only become a reality when the war in Ukraine ends with a stable peace. And even then, it won’t happen straight away.
