Trade Idea: Ukraine agrees to Trump mineral deal before April?
Market: Ukraine agrees to Trump mineral deal before April
Trade: No at 30% odds
Return: 233% (resolved at the end of a March)
Welcome back to The Poly. Our last idea has returned 16% in two days, growing to a nice 25% gain if all goes well until the market resolves tomorrow. Today we are looking at the minerals deal between the US and Ukraine, despite the market title being about Ukraine agreeing to the deal, the rules state that this market only resolves to yes once the deal is officially signed.
The TL;DR of this article is that the market is currently pricing a 30% probability that the deal isn’t signed in March. I go into detail about why this may be mispriced, and I believe the true probability of the deal not being signed this month is likely closer to 50%. Given that, we have a large expected value trade here. I am putting a medium size position on this trade, given that there is still a possibility the deal does indeed get signed.
The Status and Prospects of the US-Ukraine Mineral Deal in March 2025
The proposed mineral deal between the US and Ukraine has been a rollercoaster lately. Since late February, we've seen diplomatic drama, false starts, and a whole lot of uncertainty. As of March 6, both countries still haven't signed anything, despite early hopes they would. The deal would basically give America some control over Ukraine's minerals in exchange for investment and possibly security arrangements. Unfortunately for proponents of the deal, things got messy after Presidents Trump and Zelensky had quite the public confrontation at the White House.
Recent Diplomatic Breakdown and Attempted Recovery
Things really fell apart during Zelensky's White House visit on February 28. What should have been a simple signing ceremony turned into an embarrassing public spat that's completely reshaped how these countries deal with each other. Trump, Vance, and Zelensky got into a heated shouting match right in front of journalists and TV cameras - not exactly diplomatic gold. Afterward, Zelensky left Washington empty-handed, leaving everyone wondering what would happen next.
The aftermath got ugly fast. On March 4, Trump pulled the plug on over $1 billion in military aid to Ukraine - a huge shift in American support. We're talking hundreds of millions in weapons that were already on their way. Russia's spokesman Peskov was pretty pleased, suggesting this might finally push Ukraine toward peace talks. This sudden aid cutoff put even more pressure on Ukraine to reconsider their stance on the minerals deal.
Trying to patch things up, Zelensky posted a long social media message on March 4, thanking America for its support and saying Ukraine would sign the minerals deal "at any time and in any convenient format." Trump acknowledged this during his address to Congress later that day, even reading parts of it out loud. He quoted Zelensky saying: "Ukraine is ready to come to the negotiating table as soon as possible" and "regarding the agreement on minerals and security, Ukraine is ready to sign it at any time that is convenient for you."
Terms and Structure of the Proposed Mineral Deal
So what's this deal actually about? It would create a jointly managed reconstruction fund with big economic implications for both nations. Ukraine would kick in 50% of future money from state-owned mineral resources - oil, gas, and logistics infrastructure. Ukrainian Prime Minister Shmyhal says Kiev and Washington would manage the fund as equals, though the exact details are still a bit fuzzy.
America would own the maximum stake allowed under US law, according to draft agreements journalists have seen. The fund would invest in promoting "the safety, security and prosperity of Ukraine" - basically a reinvestment model for reconstruction and development. This setup could give Ukraine access to American investment expertise while giving the US influence over (and potential benefits from) Ukraine's natural resources.
The negotiation process hasn't been smooth sailing. The US apparently presented three different proposals, with Ukraine rejecting the first two because they didn't include security commitments from Washington. Even the third version, which came closest to being accepted, doesn't have concrete security promises - just vague language about promoting Ukraine's "safety, security and prosperity."
Obstacles to Finalizing the Deal in March
Despite both sides saying they want to reach an agreement, several major roadblocks could prevent anything from happening this month. Treasury Secretary Scott Bessent, who's been negotiating directly with Zelensky, bluntly answered "Not at present" when asked on March 3 if the economic deal was still on the table. Sources say the terms might change because Trump reportedly now wants a "bigger, better deal."
Another sticking point? The Trump administration doesn't want to include explicit security guarantees for Ukraine. US officials keep arguing that the economic agreement itself is a form of security guarantee and that Europe should take the lead on Ukraine's defense. This clashes with what Zelensky wants - more concrete American security commitments - creating a fundamental tension in the negotiations.
Then there are practical challenges about the actual minerals involved. According to Foreign Policy, Ukraine might not even have the valuable rare earth minerals both sides keep talking about in public. The country apparently has no commercial deposits of rare earth elements and relies on outdated Soviet-era geological mapping. Plus, even if these resources exist, developing them would be incredibly difficult with the ongoing war, especially since Russia controls about 20% of Ukrainian territory, including significant portions of its mineral reserves.
Competing Claims About the Deal's Status
We're getting mixed messages about where things stand. Reuters reported that the US and Ukraine were getting ready to sign the deal on March 4, with sources saying Trump planned to announce it during his address to Congress. But US officials disputed this, and no agreement happened that day. Administration officials told CBS News on March 4 that there was no plan for Trump or his advisors to sign anything.
Despite the contradictions, Vice President Vance seems optimistic, saying, "I think the president is still committed to the mineral deal," and "I think we've heard some positive things, but not yet, of course, a signature from our friends in Ukraine." This suggests they're still talking rather than close to signing.
Broader Geopolitical Context and Implications
All of this is happening against a backdrop of shifting US foreign policy under Trump and the ongoing war in Ukraine. Russia currently holds about 20% of Ukrainian land, including the eastern Donbas region and Crimea, which contains a significant chunk of Ukraine's mineral reserves. These occupied areas have rare earth elements used in defense, aerospace, tech, and energy production, making them strategically important to both Ukraine and the US.
Ukraine supposedly holds about 5% of the world's total reserves of rare earth elements, compared to America's estimated 1-2%, despite the US covering about 12 times as much territory. This resource imbalance helps explain why America is so interested in accessing Ukrainian minerals. But mining experts caution that developing these resources would take years of investment even during peacetime, with the Center for Strategic and International Studies estimating that "the United States may not yield benefits for another 20 years."
The ongoing Russia-Ukraine war makes everything more complicated. Trump has mentioned having "serious discussions with Russia" about the conflict, though he didn't give many details during his congressional address. The European Union has apparently been left out of US-Russian negotiations over a potential ceasefire, which has allies worried that any peace deal might favor Russian interests.
Conclusion
As of March 6, 2025, nothing's been signed yet, even though both sides say they're willing to make a deal. Zelensky has publicly stated Ukraine's ready to sign "at any time and in any convenient format," but Trump seems to be holding out for better terms. The history of failed negotiations, recent diplomatic tensions, and practical challenges about Ukraine's actual mineral resources all suggest that finalizing anything this month will be tough.
The potential deal would create a jointly managed investment fund with Ukraine contributing 50% of proceeds from its state-owned mineral resources, but it doesn't include the security guarantees that Kiev wants. With US military aid to Ukraine currently on hold and Trump talking separately with Russia, this mineral agreement has become even more important as a potential way for US-Ukraine cooperation to continue. Whether they can work through their differences and finalize something this month is anyone's guess - with contradicting reports and ongoing negotiations, it looks like more diplomatic heavy lifting will be needed.