Subsoil Agreement: Ministry of Economy Names Main Task of Joint Fund with US
Kyiv • UNN
The American-Ukrainian Investment Fund for the Reconstruction of Ukraine, with a capital of $150 million, will be a market maker for critical raw materials and the mining industry. The fund will also develop a system of military and political risk insurance to attract investors.
The Ministry of Economy wants the American-Ukrainian investment fund for the reconstruction of Ukraine to be a market maker for critical raw materials and the mining industry. This was stated by Deputy Minister of Economy, Environment and Agriculture Yehor Perelyhin during his speech at the international forum United by Mining, UNN reports.
Both sides will contribute the full $150 million this year (to the Reconstruction Investment Fund - ed.) and what remains next year. So, currently $150 million will be the total capital. The fund will be replenished from rent from new special permits (for subsoil use - ed.), and from other revenues, for example, from auctions of special permits.
He outlined the main task of the American-Ukrainian investment fund for the reconstruction of Ukraine.
The fund is de facto a market maker, we want and are building the system in such a way that the Fund will be a market maker in the critical raw materials market, in the mining industry. The fund wants to see strategic partners.
Lithium mining
Perelyhin noted that lithium is on the list of interesting minerals, metals and other critical raw materials in the context of the creation of the Investment Fund.
The Fund's investment protocols have not yet been approved. Therefore, I cannot yet comment on what the criteria, standards and procedures will be 100%, because we are in the process. The Fund will wait until the investment protocols are approved, we understand that this will happen this year in the next two months.
Political and military risks
Deputy Minister of Economy, Environment and Agriculture Andriy Telyupa, speaking at the international forum United by Mining, noted that the American-Ukrainian investment fund will enable the development of a system for insuring military and political risks.
When we talk to potential investors, political risks are one of the fundamental issues. Because investing in such projects is an investment for decades. World practice shows that an investor must be fully insured against any eventualities. That is, if we are talking about decades, this includes the possibility of a change of government, nationalization of the project. In order for international companies to come, their risks must be covered as much as possible. We have now built this ecosystem, it is already gradually working. In general, war risk insurance in Ukraine is already covered for about 1 billion dollars.
Draft critical minerals strategy
Telyupa stated that the government sees a clear development of the industry not only as a mining one.
We have now prepared a draft critical minerals strategy. Now we will move on to more detailed discussions, meetings with our international partners, and repeated discussions with the market. The main conclusion of this strategy is that for the Ukrainian economy to grow, the main focus should be not on extraction, but on processing, and then on commodity production. There is a clear vision of which priority minerals and, accordingly, processing should be developed first. We will discuss all this with the market, because we see that products with higher added value will enable Ukrainian exports and Ukrainian business to grow.
Because, according to him, the prospects for growth of raw material exports are quite limited, so the main focus remains on processing and commodity production.
An investment portfolio of projects has already been prepared and is constantly being replenished. There are currently 12 investment projects there. Projects worth 2.4 billion dollars.
Context
On September 17, the International Development Finance Corporation (DFC) announced the allocation of $75 million to the American-Ukrainian investment fund for reconstruction, as a first contribution to launch the fund's investments in critical minerals, hydrocarbons, and related infrastructure in Ukraine.
Ukraine will double this contribution. Thus, the starting positions will amount to $150 million.
Minister of Economy, Environment and Agriculture Oleksiy Sobolev reported that Kyiv expects the Reconstruction Investment Fund to have $150 million by the end of this year. And by the end of 2028, the volume could increase by at least $200 million. These funds are sufficient to start the first large-scale investments.