DEEP DIVE — Over the past week, the Trump administration took two steps involving the pursuit of critical and rare earth minerals: it issued an executive order to boost domestic mining and production, and it moved to reopen with talks with Ukraine on a framework agreement for joint development of Ukraine’s trove of critical minerals. The Ukraine deal – which had been initially presented as an element of a broader peace agreement to end or at least pause the war in Ukraine, now appears to be part of a broader U.S. goal: to safeguard the supply chain of a range of mineral resources that is currently dominated by China.
On Thursday, President Trump signed an executive order directing federal agencies to work for an immediate boost in U.S. minerals production, and said “overbearing Federal regulation” had stalled such efforts in the past. The directive calls for more federal land with mineral reserves to be cleared for mining, and the use of Defense Production Act authorities to expedite the process. The order emphasizes national security concerns and the need to secure critical mineral supply chains, for everything from electric vehicles to smart phones to high-end weapons for the U.S. military.
China produces an estimated 60 percent of rare earths and processes nearly 90 percent of them. China also hosts a significant portion of global lithium, cobalt and nickel production. These minerals are vital to the supply chain for various high-tech and military industrial sectors.
Experts say that for all the efforts to access more U.S.-based minerals, geological realities mean the U.S. will need to rely on other nations for supplies. “We can't change that geology is where geology is,” Gracelin Baskaran, Director of the Critical Minerals Security Program at the Center for Strategic and International Studies, told The Cipher Brief. “We have less than 1% of the world's nickel, graphite, and cobalt. But then the other half of that is that we're going to need to do more at home and we're going to need to do more abroad.”
The issue isn’t new, but in the first two months of the Trump administration, the drive for these minerals has been a part of White House statements involving everything from the Ukraine war to Canada to Trump’s threats to take over Greenland.
THE CONTEXT
- The U.S. Geological Survey (USGS) released a report in February 2022 identifying 50 minerals deemed critical to the U.S. economy and national security and warned that the supply chains for some of these minerals was vulnerable to disruptions. That list added 15 more commodities from an initial list compiled in 2018.
- China dominates global critical minerals production and refining. China produces 60 percent of rare earths and processes nearly 90 percent of them. China also hosts a significant portion of global lithium, cobalt and nickel production.
- The Trump administration is seeking to renegotiate a deal to gain access to Ukrainian critical minerals. The initial deal included provisions for a joint investment fund, into which Ukraine would contribute 50% of revenues from mineral, oil and gas development projects until contributions reached $500 billion. It excludes currently-operating projects. The fund would go towards investment in Ukraine. The U.S. would have a stake in the fund and provide a long-term financial commitment to development in Ukraine.
- The Trump administration has framed the deal as a way to recoup costs of aid to Ukraine, and Kyiv has said it would bring welcome U.S. investment and economic presence into Ukraine. The deal was to be signed during President Volodymyr Zelensky’s visit to the White House, but that was derailed following the Oval Office incident in which President Donald Trump and Vice President JD Vance publicly criticized the Ukrainian leader.
- President Trump signed an executive order on March 20 titled, “Immediate Measures to Increase American Mineral Production.” The order aims to boost U.S. minerals production by streamlining permitting processes, identifying mineral-rich areas on federal lands to develop, and invoking emergency powers to allow the Pentagon to prioritize focus on securing critical minerals supply chains, namely by reducing reliance on sources from foreign rivals.
The Cipher Brief spoke about the critical minerals issue – and the challenges which surround it – with Fabian Villalobos, senior engineer at RAND and a professor of policy analysis at the RAND Graduate School of Public Policy; Gracelin Baskaran, Director of the Critical Minerals Security Program at the Center for Strategic and International Studies; and Tamerlan Vahabov, a former advisor to the Director of the Defense Procurement Agency of the Ministry of Defense of Ukraine.
Excerpts of these conversations have been edited for length and clarity.
THE EXPERTS
These minerals are everywhere. Most Americans don't really think about the dirt that comes out of the ground that then becomes a value-added chemical product, as a manufacturing input into all kinds of applications. These things are all around us, and they're all around the military equipment and weapon systems as well.
Depending on which mineral we're talking about, there are a variety of use cases. And a lot of the national security concerns stem from those that have dual-use applicability.
In the case of lithium, for example, there is a large application coming from demand for lithium ion batteries, and that demand can stem from electric vehicles or stationary energy storage systems. In the case of tungsten, that's a metal that the defense and aerospace sector relies upon for high-temperature components in jet engine turbines and those types of things. So there's a spectrum of utility on there, and each mineral will have a different demand signal depending on that spectrum.
There's different parts of this minerals value chain: extracting these things out of the ground, first of all; then there's the processing of these things into a concentrate that is refined into a metal or a precursor for an intermediate chemical, that is then used by manufacturers to create these components that go into either a battery system, an electric vehicle, an electric motor, or a semiconductor.
If we're talking about an entire value chain, in many of these cases, there is dominance by China or by other countries at one point. That node can be a choke point from which an export control or an export ban could restrict access for U.S. industry to be able to consume those components and continue to manufacture their products for consumers, whether they be civilian consumers or military consumers.
We do have a reliance on traditional allies and partners for some of these, and that's not a bad thing. In cases where we have more reliance on China, then we really want to leverage those allies and partners. We also have access to some of those materials domestically, and developing those domestic resources makes great sense. Where allies and partners come in is where we don't have access to those particular materials. A lot of the domestic projects are slow to move in terms of producing material; there's a long permitting process that delays new projects from opening up, and other countries can move faster. And if those countries are our friends, then we can supplement our needs in the near term with supply from friendly countries.
The reality is there are things we can and can't change. We can't change that geology is where geology is. We have less than 1% of the world's nickel, graphite, and cobalt. But then the other half of that is that we're going to need to do more at home and we're going to need to do more abroad.
President Trump's first and foremost focus has been on rare earths. Rare earths are vital for defense. It's used virtually in every form of defense technology from fighter jets to warships, missiles, lasers, tanks, ICT (information and communication technology). It's also used for various clean-energy technologies and in advanced semiconductor manufacturing.
So President Trump's explicit focus has been on rare earths. However, the broader narrative about minerals and rare earths have been on valuable critical minerals. Ukraine is well endowed. They have uranium for nuclear fuel, graphite, rare earths, titanium. They have a whole basket.
Ukraine tomorrow is not going to yield a sharp rise in resources, but it does indicate a much bigger focus on the upstream minerals procurement of key legislation. So ultimately, when I look at minerals I'm digging out of the ground, those go into the goods that are in defense technologies, electric vehicles, other clean-energy technologies, semiconductors, other strategic technologies — those are the things that we use every day and they protect us, they keep us safe, and they ultimately keep our economy functioning.
Americans should be paying attention to this, because it's starting to provide a blueprint for how the U.S. is pursuing not only foreign policy, but also minerals. We have seen in the first two months of President Trump's administration, he's talked about rare earths in Greenland, rare earths in Ukraine, and annexing resource-rich Canada. So what we know is that minerals will feature much more prominently in President Trump's foreign policy.
We're entering an era of transactional foreign policy. President Trump says, OK, well, obviously there's benefits for Ukraine [in the proposed U.S. minerals deal with Ukraine]. This fund that's being set up through the agreement essentially functions as a development instrument, because it can be future investment. And Ukraine has a lot of development to do. Keep in mind that a significant amount of Ukraine's infrastructure, especially energy, has been bombed out. But it's transactional, because it's saying, I'm getting something back. So I think that going forward, our foreign policy is pivoting towards both minerals and a transactional approach.
For Ukraine, the benefits [of a minerals deal] would be a lot of technology transfers, which we lack for this industry specifically, to set up mines and separation plants. It could potentially spur the growth of small and medium-sized enterprises (SME) that will be serving that industry, like insurance companies, training companies, service providers, spare parts manufacturers, and so forth. So it could create a long-term ecosystem for the economic growth and SME development here in Ukraine. It can also lead to stabilization funds and state-owned funds for investments.
One more positive side of it is that if we have a vested U.S. interest — I'm sure that European and maybe Asian companies will also be taking part — this will lead to a strong Western and other international economic presence here, which will serve as a catalyst for Ukraine's security. This is like a security guarantee, and better than other security guarantees. Another Budapest Memorandum? No, it doesn't work, as we see it. NATO membership? Let's be realistic, we are not there yet.
But there are pitfalls and nuances [in the minerals deal] that we really have to take into account. To develop a mine and to reach the level where it will start yielding results and dividends takes 15 to 20 years. And each mine costs between half a billion to one billion dollars. So it's a long-term commitment.
Another key hurdle in Ukraine is that we do not have updated geological maps of what we have. The last one was done right before the dissolution of the Soviet Union, and the technology for exploration that was used was old. So we really need a new approach for that. And it will also take time, technology and investment.
Neither the United States nor Ukraine can force private companies to come here and work — they have to be interested in it. There has to be a commercial incentive for those companies. If it was Russia or China, there are state-owned enterprises in those countries that they can say, You go and do that and take a loss. But we cannot do that, neither Ukraine nor America. So we have to incentivize those companies so they understand that the Ukrainian soil does have this lithium, aluminum ore, etc.
I think the Ukrainian administration, the current or the next one, should be careful in maneuvering with the United States on this. At the same time, we should start negotiations with the European Union and use their current benevolence to start the infrastructure investments. Because this is another key thing that will also affect that project with minerals: almost half of Ukraine's electricity infrastructure has been destroyed by the Russians, or is in the [Russian-] occupied zone. The mining industry, if I'm not mistaken, is consuming like 50% of industrial power globally and 15% of electric power globally, when it comes to those heavy industries. So it's energy intensive and we don't have that capacity either. So that's why we really have to work with everyone — with financial institutions, with European donors, with the American government currently, and other countries as well. We really need a lot of technocratic work ahead before this comes to fruition.
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