If you are wondering why the Trump Administration is holding Ukraine hostage in its war with Russia you should understand what is being asked. 

They are seeking an agreement for $55 billion in rare earth minerals and other elements. Here's why that matters.

The demand for rare earth minerals is expected to grow significantly over the next two decades, driven by their critical role in various high-tech applications.

Here are some key trends:

Electric Vehicles (EVs): The shift towards electric vehicles is a major driver of demand for rare earth minerals, particularly for neodymium, praseodymium, and dysprosium, which are used in the production of permanent magnets for EV motors.

Renewable Energy: Wind turbines and other renewable energy technologies also rely heavily on rare earth minerals. The global push for clean energy solutions will further boost demand.

Consumer Electronics: The proliferation of smartphones, laptops, and other consumer electronics continues to drive demand for rare earth elements used in components like screens, batteries, and speakers.

Defense and Aerospace: Rare earth minerals are essential for various defense and aerospace applications, including precision-guided munitions, radar systems, and advanced communication technologies.

Geopolitical Factors: Geopolitical tensions and efforts to secure supply chains may lead to increased stockpiling and investment in rare earth mining and processing capabilities.

Overall, the demand for rare earth minerals is projected to rise steadily, with some estimates suggesting a doubling or even tripling of current demand by 2045.

The agreement so far includes: 

Revenue Sharing: Ukraine will contribute 50% of the revenues from its state-owned resources, including rare earth minerals, oil, and gas, to a joint Reconstruction Investment Fund (RIF) with the United States. This fund will be used to support Ukraine's reconstruction efforts and economic recovery following the ongoing conflict with Russia.

Resource Utilization: The agreement aims to utilize Ukraine's vast mineral resources to support both countries' economic interests. Ukraine holds deposits of 22 out of the 34 minerals classified as 'critical' by the European Union, including rare earth elements like lanthanum, cerium, and neodymium.

No Security Guarantees: The deal does not include direct security guarantees for Ukraine. However, the joint investment in Ukraine's resources is intended to incentivize the United States to continue supporting Ukraine's security and stability. Still since Russia has violated all previous treaty agreements (notably by invading Crimea, a portion of Ukraine, in 2014 despite previously agreeing not to do so this is the primary reason the treaty has not yet been signed.

Private Sector Involvement: The success of the agreement hinges on attracting private sector investment to develop Ukraine's mineral resources. This includes rebuilding infrastructure and ensuring the commercial viability of the deposits.

Geopolitical Context: The agreement is part of a broader effort by the United States to reduce its reliance on China for critical minerals. By securing alternative supplies from Ukraine, the U.S. aims to enhance its national security and diversify its supply chains.

Why this matters

China holds the largest reserves of rare earth minerals, estimated at 44 million metric tons. It also leads in production, generating 270,000 metric tons in 2024.

Our dependence on China for these minerals is a major security weakness.

Other nations have them of course including:

Vietnam: Vietnam has significant reserves, estimated at 6.9 million metric tons.

Brazil: Brazil also has substantial reserves, with around 21 million metric tons.

Russia: Russia's reserves are estimated at 3.8 million metric tons.

India: India holds around 3.5 million metric tons of rare earth reserves.

But Ukraine holds significant deposits of rare earth minerals, accounting for approximately 5% of the world's reserves. These materials are crucial for the production of devices used in renewable energy, electronics, and other high-tech industries. However, many of these deposits are located in regions currently under Russian control, such as Donetsk, Luhansk, and Crimea.

We could have resolved this issue by signing a treaty known as the "Law of the Sea," but many conservatives have serious issues with it and have opposed it for decades.

The United Nations Convention on the Law of the Sea (UNCLOS) was opened for signature on December 10, 1982, in Montego Bay, Jamaica. The process leading to the treaty began much earlier, with significant developments in the 1960s and 1970s. 

The treaty, whose signatories include:
Australia, Canada, China, France, Germany, India, Japan, Russia and the United Kingdom allows nations to control certain portions of the seabed to mine the mineral rich nodules on the ocean floor. This area in the Pacific Ocean with vast amounts of nodules rich in rare earth minerals is called the Clarion-Clipperton Zone (CCZ). This region spans approximately 5,000 kilometers (3,100 miles) across the central Pacific Ocean, at depths of around 4,000 to 5,500 meters (12,000 to 18,000 feet). The polymetallic nodules found in this zone contain valuable metals such as nickel, cobalt, manganese, and rare earth elements.

Those opposed to the treaty object due to:

Economic Concerns: Some argue that the treaty imposes a "tax" on U.S. development of deep seabeds by requiring contributions to the International Seabed Authority. They believe this could hinder American economic interests.

Sovereignty Issues: There are concerns that the treaty could subject U.S. actions to international oversight by regimes that may be hostile to U.S. interests. This includes the potential for international dispute settlement systems to be biased against the U.S.

Bureaucratic Expansion: Critics worry that the International Seabed Authority could become a large and expensive bureaucracy with insufficient control over its revenues.

Security Concerns: Some members of Congress believe that the treaty could compromise U.S. national security by limiting the country's ability to navigate and operate freely in international waters.

It's easier, cheaper, and more secure and allows the US to use leverage to reclaim some of the $350 billion in aid we've given to Ukraine.