U.S.-Ukraine minerals deal unlikely to yield profits for years — media

Reuters reported the information.

According to mining experts, even in stable, industrialized countries like Canada or Australia, fully developing a deposit can take 10 to 20 years. In Ukraine, most deposits are still insufficiently explored to confirm their profitability. Additionally, war-damaged energy and transport infrastructure, along with security uncertainty, are holding back investment activity.

Despite this, Ukrainian officials call the agreement a political breakthrough and hope it will strengthen U.S. support. The document signed in Washington stipulates that funds for the recovery fund will come from royalties, license fees, and production-sharing agreements. However, the specific financial terms have not yet been determined, they still need to be agreed upon within the framework of the partnership.

As Willis Thomas of the consulting firm CRU noted, transitioning from the presence of a natural resource to its economically viable development requires both time and substantial investment, both of which were limited even before the war began.

Before Russia’s full-scale invasion of Ukraine, mining licenses were issued slowly, according to the State Service of Geology and Mineral Resources. Between 2012 and 2020, only 20 licenses were granted for oil and gas, along with a few for graphite, gold, manganese, and copper. Overall, the country holds more than 3,400 licenses.

Since the new agreement involves the creation of a limited partnership, analysts do not rule out the possibility of direct state investment from both countries into future mining ventures.

However, another major challenge is that some of the most promising deposits are located in temporarily occupied territories. Of the 24 potential mining projects identified by Benchmark, seven are in areas currently controlled by Russia. These include deposits of lithium, graphite, rare earth elements, nickel, and manganese.

A representative of a Ukrainian company holding the license to develop the Polokhivske lithium deposit — one of the largest in Europe — said that without Western security guarantees, implementing such projects would be extremely difficult. Meanwhile, U.S. officials believe that American interests in the sector could help deter aggression.

• On April 30, Ukraine and the United States signed an agreement to establish the Ukraine Reconstruction Investment Fund.
• The White House called the signing of the agreement on the establishment of the Reconstruction Investment Fund between the United States and Ukraine a first-of-its-kind historic partnership.
• On May 1, Ukraine's Cabinet of Ministers registered a draft law in the Verkhovna Rada on the ratification of the agreement with the United States to establish the U.S.-Ukraine Reconstruction Investment Fund.
• Ukrainian Economy Minister Yuliia Svyrydenko stated that the U.S.-Ukraine Investment Fund could become operational within a few months after the ratification of the minerals agreement in the Verkhovna Rada.