The mineral resources agreement being proposed by the US to the Ukraine as part of a peace deal to end the war with Russia has ignited much debate about a new way to exploit critical natural resources.

If done right - this type of deal could prove very positive, particularly for developing countries. On the one hand it could deliver a real economic boost to host countries while providing a secure source of critical metals and
minerals for industrialised nations.

It's been done before
However, the principles behind the proposed US-Ukraine minerals deal are not new and are much more about revisiting a well-worn US play book. Besides, one country has been pursuing this approach for decades. Let me explain.

In the 1930s the US signed a deal for guaranteed access to Saudi Arabian oil in exchange for helping the Kingdom to modernise. In the 1960s, the US traded economic help to Chile in exchange for favourable access to that country’s copper resources.

And the country that has been doing this for decades is of course China. It’s massive Belt & Road Initiative, which stretches across the world, is partly about creating new infrastructure and providing economic support in exchange for access to critical minerals. These include cobalt, lithium, and rare earths from countries like the Democratic Republic Congo (DRC), Argentina, and Peru.

Returning to the Ukraine. The US proposal would be to allocate 50% of future revenues from Ukrainian government-owned natural resources to a jointly managed reconstruction investment fund. The goal of this fund would be to support Ukraine's recovery and economic development. The expectation is that US companies would be intimately involved in the exploitation of these minerals and Ukraine’s future.

Catching on?
Following the US-Ukraine news – the DRC stepped forward offering the US exclusive rights to extract and export essential minerals, such as cobalt, lithium, tantalum, and uranium. This would be in exchange for infrastructure and security assistance amid ongoing regional conflicts.

However, even that invitation to the US, though bold, is not novel.

Remember the Manhattan Project? The US initiative to build a nuclear bomb in the 1940s. The US sourced the uranium for the project from the Shinkolobwe mine in Belgian Congo (now DRC), which apparently involved some economic and military assistance.

One of the last measures by previous US President Joe Biden was a plan to extend a railway to channel critical minerals from Congo and Zambia to a port in Angola presumably for shipments to the US and its allies. The plan is to loosen China’s grip over DRC’s resources and maybe encourage US mining companies to get more involved in the vast resource-rich country.

The fact that the US is dusting off the concept of strategic resource alliances – is nonetheless a consequence of the fracturing global order and a potential return to the 19th century scramble for resources (see my article: Geopolitics strikes back: The future of mining in the new world order). Even the idea of buying resource-rich Greenland has form (the US bought Louisiana from France in 1803 and Alaska from Russia in 1867).

A source of hope
Though I do not welcome this harsher Darwinist world – being a born optimist I do see a potential silver lining from some of these strategic partnerships as I suggested earlier in this article.

Take the DRC. This is a war-torn country where over 6 million people have died, mainly due to disease and malnutrition – a consequence of little to no infrastructure, no properly functioning government and no social services.

Meanwhile, much of the country’s valuable resources are being plundered by violent war lords who also oppress the local population and use slavery to dig up metals and minerals.

If reputable global mining companies were to move in with military support – it could bring much needed order.

At the same time, many of these global mining companies are listed on leading stock exchanges and are therefore owned by large institutional investors. Many of these investors, some of whom are already quite sceptical about the sector’s ESG credentials, would expect those mining companies to improve conditions for host communities and workers.

Stability and an injection of capital from mining revenues could be transformative for parts of this desperately impoverished country.

The case for human rights
Admittedly, the DRC is an extreme case. Nonetheless, mining done responsibly can do wonders for economic development and improve the lives of people in developing countries who are directly impacted by a new mine.

I’m hoping that mining companies, particularly from places such as Europe, North America and Australia, will see supporting human rights not just as an ethical priority, but also as a competitive edge.

I don’t believe the typical 19th century approach of conquest by invading armies against the consent of local populations will work. As shown in Afghanistan, Iraq and Ukraine very cheap weapons, such as improvised explosive devices and drones, can wreak havoc on large well-equipped armies.

Therefore, bringing local populations on board may become even more important for the success of new mining projects in developing countries.

Of course, the potential fly in the ointment is that a scramble for resources can quickly degenerate into proxy wars as happened in much of the developing world during the cold war. This is obviously devastating for local populations.

But hopefully it won’t come to that.