As US Treasury Secretary Scott Bessent toured Ukraine this week, President Volodymyr Zelenskyy put forward a proposal for potential rare earth mining deals—reminiscent of the legendary “Potemkin villages.” This maneuver appears designed to court former President Donald Trump, who has suggested Ukraine’s rare earths could secure continued US military support.
While a formal agreement may be announced during the Munich security conference, the reality of such a deal is tenuous at best. Ukraine does not currently produce rare earths, has no proven reserves, and is unlikely to become a significant player in the global market. Developing a rare earth mine would require either massive US funding or tax incentives, with little financial return.
The numbers further undermine the proposal. The US annually imports just $200 million worth of rare earths, while Trump has speculated about securing $500 billion worth. Even the only major non-Chinese rare earth producer, Lynas, posted revenues of just $293 million last year.
Moreover, despite their strategic-sounding name, rare earths are largely used in mundane manufacturing applications—fridge magnets and lighter flints account for more consumption than defense-related uses like missiles and lasers. The US’s relatively small manufacturing sector cannot absorb a significant share of global supply, even with optimistic projections.
Some commentators have suggested the US may actually be eyeing Ukraine’s lithium or mineral sands. However, Ukraine’s lithium resources are modest at best, dwarfed by US reserves. Similarly, its ilmenite reserves are just 1% of the global total.
Ultimately, while a rare earth agreement may bolster political ties and diplomatic optics, it is unlikely to reshape global minerals markets or offer tangible benefits for either side. The true advantage seems to lie in the political theater rather than economic substance.
