Can the Three Seas Initiative Save the US-Ukraine Critical Materials and Minerals Deal?

On 28 February, President Trump and Ukraine’s President Zelenskyy were expected to sign a preliminary critical materials and mineral deal. The partnership intended to finance Kyiv’s defence against Russia, its post-war reconstruction and the repayment of US assistance via a joint fund drawing on the rights and revenues of Ukraine’s relevant resources. However, it fell short of a security guarantee, which Trump said Europe must be responsible for.

The contentious Oval Office meeting failed to produce a signed agreement, and indicated that the interests of Ukraine and the United States may be diverging. The summit's outcome also reflected an impasse on several points, such as prerequisites to peace negotiations, peacekeeping and the conditions for continued aid (which Trump subsequently froze).

In the days that followed, European leaders convened in London and Brussels to voice support for Ukraine, while discussing the future of transatlantic relations and the continent’s changing role in the war in the context of Trump’s apparent 'Russia reset.' The most significant outcomes thus far include the European Commission setting a goal of increasing defence spending by $700 to $850 billion, and the loosening of budget restrictions in order to pursue it.

These shifts in the transatlantic sphere present an opportunity for the Three Seas Initiative (3SI): crafting or executing the final agreement, while ensuring the interests of the US, Ukraine and Europe are not only protected, but enhanced. Neither 3SI’s involvement, nor the agreement’s success, need rely solely on the United States. Further, it can act as an alternative vehicle for EU support if Ukraine and the US remain at an impasse, while leaving the door open for Washington’s return.

Between the Baltic, Black and Adriatic Seas

3SI is an ambitious economic partnership bridging European Union nations between the Baltic, Black and Adriatic seas. Its EU thirteen members, four strategic partners (US, Germany, European Commission and Japan) and associated states (Ukraine and Moldova), are working to unleash the region’s potential while building up Europe’s strategic resilience. It directs state and private investment into much needed infrastructure, workforce training and industrial capacity in the region, with significant security benefits for the continent.

The primary vehicle for these investments is the Three Seas Initiative Investment Fund (3SIIF). In 2020, under Trump’s first administration, the US pledged $300 million to 3SIIF via the US International Development Finance Corporation (DFC). It also pledged to match 30% of the fund’s other contributions, up to the value of $1 billion from the US (about $3.4 billion total).

This brought the total value of 3SIIF pledges at the time to about $900 million, and made the US one of its most influential partners. It currently is valued at about $1.037 billion, according to the fund’s exclusive investment advisor, Amber Fund Management Limited. The first round of the US disbursements were announced mid-2024, but their current status is unclear.

If there is a role for 3SI in Ukraine, it will be limited by geological reality. For all of the hype around the US 'mineral' deal, comparatively little attention was spared for the exact resources that Ukraine could offer. Before turning to the opening for 3SI, it is worth clarifying some terminology and the geological dynamics at play.

As Common as Mud

Rare earth elements are not as rare as some might think. Most are in fact quite abundant and accessible. It is simply a matter of how concentrated the seventeen rare earth elements are. Beyond this, rare earths must undergo a costly refinement process, one China has long dominated.

While many outlets describe the plan as a 'rare earths deal,' evidence for rare earths in Ukraine is sparse. Projections of vast mineral and rare earth wealth rely on outdated Soviet speculation. The limited up-to-date studies identify only a few potentially significant and accessible REE deposits, which would take decades and significant investment to utilise. That being said, according to EU figures in 2023, Ukraine does process at least two REEs: as a percent of global production, this included scandium (4.3%) and gallium (2.2%).

From a US perspective, Ukraine’s potential for mining and processing critical minerals more broadly is only somewhat more promising. In 2020, it was among the top ten global producers of raw titanium sponge (2.2% of global output; excluding US production), graphite (1.7%; including US) and magnesium metal (.06%; excluding US). It may also be able to extract modest amounts of elements and compounds on the US’ 2022 list of critical minerals, as well as nickel, which is anticipated to become critical for the US within the next ten years.

As the EU’s December 2021 raw materials partnership memorandum of understanding with Kyiv and the EU’s 2023 critical raw materials study demonstrate, Ukraine will be increasingly important for the EU’s supply chain resilience. In terms of the EU’s critical and strategic raw material imports, Ukraine provided titanium ores (9%), graphite (7%) and manganese (3%). In terms of the EU’s mineral imports in various stages of processing, Ukraine provided manganese (19%), titanium sponge (2%) and gallium (2%).

While it is possible that a surge of investment could increase Ukraine’s mineral output, it is necessary to acknowledge the obvious: Ukraine’s proven critical mineral reserves are quite limited, and its potential REE production is unclear, at best. Even if Ukraine managed to magically produce 20% of REEs, this would at most be worth $3 billion per year under current market conditions.

Those are the scientific and economic constraints on Ukraine’s mineral market. But for a 3SI critical materials and minerals deal, the politics are just as important. What would an agreement with Ukraine hope to achieve?

At a high level, Washington’s strategy is to decrease China’s significant influence over US supply chains. Europe generally shares a similar aspiration. However, Ukraine’s small share of the global minerals market is unlikely to advance that interest.

Policymakers should be clear about the rationale behind a deal. It is not to turn a large profit or to significantly decrease short-term supply chain vulnerability. It is a commitment to the continued existence of Ukraine, the defence of Europe and the containment of expansionist powers.

It is an idea that could appeal to both sides of the Atlantic. Marta Kos, the EU Commissioner for Enlargement, recently stated as much, predicting Ukraine could join the union before 2030 at its current rate of reform. In a recent interview, Vice President JD Vance, stated that the proposed deal was intended to show the Ukrainian people 'that America has a long-term investment in their sovereignty.'

In this sense, the interests of Europe and the Trump administration are very much aligned: Europe must be able to fend for itself, and if Ukraine’s sovereignty is of paramount importance to European interests, then its nations must aggressively invest in their collective comprehensive defence.

The 3SI countries know this better than anyone, and have been leading by example out of necessity. Thus, if the EU is serious about integrating Ukraine before 2030, then boosting 3SI investment in its physical, digital and civic infrastructure is the next logical step.

Heartlands and Rimlands

As Yorktown Institute and various others have emphasised, something such as 3SI Plus (+) could hasten the integration of countries and infrastructure projects spanning the Barents, Caspian and Arabian seas, while preventing a world in which highly restrictive blocs become the norm. In geopolitical terms, it would help Europe and the US remain competitive in both of Mackinder’s 'Heartlands' as well as on the 'Rimlands' emphasised by Spykmann.

If 3SI nations are proactive, they have an opportunity to combine the EU’s ability to steadily craft and pursue strategic policy goals with the US’ ability to quickly inject significant capital. Further, 3SI+ would encourage additional investment from firms, governments and transnational organisations throughout the region and around the world.

Thus, a 3SI-Ukraine deal could be the tip of the spear for more European security and commercial investment in Ukraine – mineral and otherwise. At a time of alliance-wide rebalancing, this could be a point of agreement: Europe achieves greater continental integration, and America can rebalance its security commitments between Europe and the Indo-Pacific.

Achieving this means that Kyiv, Brussels and the 3SI nations will need to factor in Trump’s preference for bilateral negotiations and deals in pursuit of America’s national interest. This leaves three scenarios for 3SI’s involvement in any critical material deals with Ukraine:

1.) The US reaches a relatively balanced bilateral deal with Ukraine, meaning 3SI’s primary opportunity lies in its execution (for example, winning contracts, providing aid and diplomacy).

2.) The US and Ukraine remain at an impasse, forestalling the deal. This places the initiative on 3SI and EU to shape the risks and opportunities of a deal with Ukraine.

3.) 3SI works with the US to act as something of a diplomatic and financial force multiplier, allowing Trump greater influence over Ukraine and the EU than either may otherwise be willing to grant at face value, while creating a win-win-win deal.

Amid the alliance-wide shifts, Europe and America’s converging interest is underappreciated: both sides are increasingly interested in greater European defence capabilities, which would allow America to refocus on its competition with China.

For instance, Beijing recognises that threats from the US and Russia may cause Europe to de-emphasise its reliance on China by necessity, as public opinion and strategic interests indicate. This makes it more difficult for the US to de-risk its ties to China. Further, China has long sought a role securing peace in and rebuilding Ukraine. It is reportedly redeveloping Russian-occupied territories, and is eagerly working to replace the US as the world’s diplomatic force, a challenge to Trump the 'peacemaker and unifier.'

The US is rebalancing its security commitments and Europe must act accordingly. If Europe accepts a greater defence burden, a mineral deal would be an excellent way to solidify its commitment to Ukraine’s future. A 3SI deal could lead the way.

© Farrell Gregory and Grant Turner, 2025, published by RUSI with permission of the authors.

The views expressed in this Commentary are the authors’, and do not represent those of RUSI or any other institution.

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