Business news from Ukraine

To increase investment in the development of deposits in Ukraine, it is necessary to remove the classification for official use from geological data

In order to increase investment in the development of deposits in Ukraine, it is necessary to remove the classification for official use (DSP) from geological data on critical minerals, according to participants of a special industry conference of the European Business Association (EBA) Mining Day (Mining Day), held in Kiev on Friday.

Denis Alyoshin, Director of Strategic Development at Ukrlicitydobycha, noted that access to information can be a very simple and effective incentive for investment. And now it is possible to get information other than that which has the CPD grip.
“But why now we still have information with the CPD grip? What exactly do we not want to show? When I communicate with international investors, on my project I cannot show the critical information that is needed to evaluate my project. For two or three years we have been sending letters to the Prime Minister or relevant ministries, etc. Everyone supports it, no one understands why we need a CPD,” questions Aleshin.

In his opinion, this is a very simple and very effective step, which will immediately open the door, at least for many investment intentions, “even if not investments, but intentions”. Currently, this is a very painful issue for the industry, the manager emphasized.

Referring to the activities of Ukrlitia, he reported on the implementation of the project for the development of Polokhovskoye lithium deposit (Kirovograd region), the resource base of which is 75 million tons of lithium-bearing ore. The company intends to produce concentrate from it and then lithium hydroxide/carbonate.

“The strategy is to work with Europe, as there is not enough lithium there. Lithium is used in the production of lithium batteries. The plans are to recycle, build a plant. We plan to prepare a study according to EBRD standards to attract financing,” the strategic development director said, adding that one of the biggest problems at the moment is qualified personnel.

In turn, deputy director for investments of the investment company umgi Mykola Shevchenko noted that Ukraine has a number of advantages for attracting investments in subsoil development: “what we have and what we can offer investors”.

“In particular, the vast majority of information in Ukraine is available on various minerals. But there is also CPD on critical minerals. And we support the opening of this information for all investors”, – emphasized Shevchenko, adding that now it is impossible to make a strategic decision on the extraction of certain minerals.

At the same time, the manager named among the advantages of Ukraine – availability of land: in Ukraine there is a mechanism of compulsory purchase of land for system needs, while in a number of countries there is no such thing.

“There is transparency of auctions. There is availability of geological information and detailed exploration of territories, but more openness is needed. Among the economic factors, in particular, the low cost of land ($3 thousand, and for example in Poland – $40 thousand) and the low cost of labor ($600),” – stated the deputy director.

In his opinion, to attract investors it is necessary to guarantee military risks, guaranteed withdrawal of dividends, fiscal incentives: tax vacations, preferential long-term lending, decentralization of taxes, so that part of the tax remained locally. Also speeding up and simplifying the change of land designation, greater openness of all geological information.

“We have invested in most of the projects in Ukraine – in mining, and less in processing, as there are certain chemical processes required, there are difficulties in obtaining permits from environmental authorities,” explained the manager.
Andriy Gorokhov, CEO of umgi, added that there is currently no operating critical materials player in Ukraine that is successful: this means that we are not doing something enough as a society.

“Companies have now taken considerable risks and are investing in critical industry projects. They are doing it themselves thanks to equity capital. With no help from the government. They are doing well and are heroes because they are taking big risks. No strategy from the government, no support. It takes a lot of effort, and it is very difficult to cope with the problems alone,” the top manager emphasized, noting that projects in this area are estimated from $300 million to several billion dollars “to build both production and process.”

Therefore, it is difficult for investors to make decisions taking into account the current situation and low returns on funds invested in the projects.

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STATE SERVICE OF GEOLOGY OF UKRAINE PUT UP FOR AUCTION 5 OIL AND GAS AREAS

The State Service of Geology and Subsoil of Ukraine has put up for electronic auction five hydrocarbon sites with a total starting cost of UAH 207.8 million (excluding the cost of geological documentation), the authority has said.
At the auction on October 20, 2021, in particular, Pivdenno-Rusanivska area (Sumy and Poltava regions) was put up for UAH 92.5 million (hereinafter without VAT), Zhukivska area (Poltava region) – for UAH 5.306 million, the Kitvan area (Ivano-Frankivsk region) – for UAH 1.925 million, Reshetylivska area (Poltava region) – for UAH 2.229 million and Tynivske area for UAH 107.847 million.
As reported, following the results of electronic trading in 2020, the State Service of Geology and Subsoil attracted UAH 826 million of direct revenues to the state budget. In 2021, a plan was announced to receive at least UAH 750 million.

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