Ukraine and US Sign Mineral Agreement, Details Announced

On April 30 local time, the U.S. Treasury Department announced that the United States and Ukraine had signed an agreement to establish the U.S.-Ukraine Reconstruction Investment Fund.

According to the statement, the U.S. Treasury Department and the U.S. International Development Finance Corporation (DFC) will collaborate with the Ukrainian government to finalize the implementation of the projects.

On May 1 local time in Ukraine, Yulia Svyrydenko, First Deputy Prime Minister and Minister of Economy of Ukraine, revealed on social media that, in accordance with the agreement reached between Ukrainian President Volodymyr Zelenskyy and U.S. President Donald Trump, she and U.S. Treasury Secretary Scott Bessent jointly signed the "Agreement on the Establishment of the U.S.-Ukraine Reconstruction Investment Fund," which was previously referred to as the "U.S.-Ukraine Mineral Agreement" by various sectors.

Based on the agreement's content released by Ukraine on May 1, the U.S. and Ukraine will jointly create the Ukraine Reconstruction Investment Fund, aiming to attract global investment into Ukraine.

The main terms of the agreement are as follows:

1. Ownership and Control:Full ownership and control remain with Ukraine. All resources within Ukraine's territory and territorial waters are owned by Ukraine, and the Ukrainian government has the authority to independently determine the locations for resource extraction. The agreement explicitly stipulates that underground mineral resources belong to Ukraine.

2. Equal Partnership:The fund will be established with a 50:50 ratio, and Ukraine and the United States will jointly manage the fund, with neither party having a dominant voting right, fully reflecting an equal partnership between the two countries.

3. Protection of State Property:The agreement does not involve the privatization process or changes in the management of state-owned enterprises. State-owned enterprises will continue to be owned by Ukraine, such as companies like Naftogaz Ukrainy and Ukrenergo, which will remain state-owned.

4. No Debt Burden:The agreement does not mention any debt obligations of Ukraine to the United States. Its implementation will enhance the economic potential of both countries through equal cooperation and investment.

5. Compliance with the Constitution and European Integration Process:The document complies with national legislation and does not violate any of Ukraine's international obligations. Importantly, this agreement will signal to other global participants the reliability of long-term (decades-long) cooperation with Ukraine.

6. Funding Sources for the Fund:The fund will be entirely filled with revenue from new licenses, covering 50% of the revenue from new licenses for projects in critical materials as well as in the oil and natural gas sectors. These funds will be incorporated into the budget after the fund's establishment. Revenue from ongoing projects or budgetary revenue is not included in this fund.

7. Moderate Legislative Changes:The operation of the fund only requires amendments to the budget law, and the agreement itself needs to be approved by the Verkhovna Rada of Ukraine.

8. U.S. Support in Attracting Investment and Technology:The fund, supported by the U.S. government through the U.S. International Development Finance Corporation (DFC), will help attract investment and technology from funds and companies in the United States, the European Union, and other countries that support Ukraine in its resistance against Russia. Technology transfer and development are crucial components of the agreement, as Ukraine needs not only investment but also innovation.

9. Tax Guarantees:Income and contributions to the fund will not be taxed in either the United States or Ukraine to ensure maximum returns on investment. The United States has provided contributions to the fund, and in addition to direct funding, it may also offer new assistance, such as providing air defense systems to Ukraine. Ukraine, in turn, will contribute 50% of its national budget revenue through new rents from new licenses for new land plots, and if necessary, it may make additional contributions beyond this base amount.

According to the Ukrainian side, the fund will subsequently invest in mining, oil and natural gas projects, as well as related infrastructure or processing projects. Ukraine and the United States will jointly determine the specific investment projects to which the funds will be allocated, and the fund may exclusively invest in Ukraine. It is expected that in the initial 10 years, the fund's profits and income will not be distributed but will instead be fully invested in new projects in Ukraine or used for reconstruction, with specific conditions to be further negotiated.

The Ukrainian side explained that the agreement is beneficial for both countries. In the agreement, the United States expressed its willingness to contribute to achieving long-term peace in Ukraine and recognized Ukraine's contribution to global security by giving up its nuclear arsenal, demonstrating its firm commitment to Ukraine's security, recovery, and reconstruction.