60 mining plots for sale: Ukraine is preparing auctions for mining
16 May 04:18
Potential investors may be offered 60 sites during auctions for the sale of special permits for subsoil use, and another 26 for the implementation of production sharing agreements. This was reported by "Komersant Ukrainian" with reference to Ukrinform.
According to the head of the State Service of Geology and Subsoil of Ukraine, Oleh Hotsynets, one of the country’s tasks under Chapter 13 of the Ukraine Facility Plan in the area of Critical Materials Management is to approve and publish a portfolio of investment projects in the mining industry for critical raw materials.
The agency is to prepare a list of solid minerals sites that will be offered for development through the mechanism of electronic auctions and production sharing agreements (PSAs).
The State Service of Geology and Subsoil has preliminarily determined the lists of critical raw materials. They have not yet been approved, but are already under consideration by the government.
“We have submitted 28 critical and 11 strategic materials for government approval. In accordance with these lists, we have prepared a portfolio of subsoil sites that can be submitted for auctions and sale under the PSA,” emphasized Hotsynets.
He added that after the lists are approved, the necessary procedures will be carried out and auctions and PSAs will be announced.
At the same time, according to Gotsynets, in accordance with national legislation, all the necessary mechanisms will be used, in particular with regard to compliance with environmental protection standards. Therefore, no work will be carried out without an assessment of the potential environmental impact of field development.
“As for the subsoil plots for auctions, there are 60 preliminary, and 26 for PSAs. But their number may still change, depending on the amendments to the legislation that are currently being prepared and the methodology that will soon be approved,” said Gotsynets.
At the same time, he acknowledged that there is a problem with developing a methodology for classifying minerals as strategic and critical. It is planned to solve it with the help of European partners who have already joined the preparation of the document.
“As soon as the methodology is approved, we will update the lists and offer appropriate sites for auctions and PSAs,” emphasized Hotsynets.
It should be noted that 2,268 companies and 78 individuals have 3,482 valid special permits for the use of Ukrainian subsoil. A significant part of the special permits is concentrated in the hands of corporate groups and individuals under sanctions. For example, Dmytro Firtash’s group holds permits for the extraction of titanium, vanadium, scandium and zirconium, while companies associated with Ihor Kolomoisky have special permits for manganese ore.
Subsoil agreement: key provisions
- Full ownership and control remain with Ukraine.
All resources on our territory and in our territorial waters belong to Ukraine. It is the Ukrainian state that determines where and what to extract. Subsoil remains in Ukrainian ownership – this is enshrined in the agreement.
- Equal partnership.
The Fund is being created on a 50/50 basis. We will manage this Fund jointly with the United States. Neither party will have a majority vote, and this will reflect the equal partnership between Ukraine and the United States.
- National property is protected.
The agreement does not change the privatization process or the management of state-owned companies – they will continue to belong to Ukraine. Companies such as Ukrnafta or Energoatom remain in state ownership.
- No debts.
The agreement does not mention any debt obligations of Ukraine to the United States. Implementation of the agreement will allow both countries to increase their economic potential through equal cooperation and investment.
The agreement is in line with the Constitution and does not change Ukraine’s European integration course.
The document is consistent with national legislation and does not contradict any of Ukraine’s international obligations. It is important that the agreement will signal to other global players that it is reliable to cooperate with Ukraine in the long term – for decades.
- The Fund will be filled with revenues exclusively from NEW licenses.
We are talking about 50% of the funds from new licenses for projects in the field of critical materials and oil and gas that will go to the budget after the Fund is created. Revenues from projects already launched or budgeted revenues are not included in the Fund. The agreement refers to further strategic cooperation.
- Legislative changes are only point changes.
Only amendments to the Budget Code are envisaged for the Fund to function. The Agreement itself must be ratified by the Verkhovna Rada.
- The US will help attract additional investments and technologies
The Fund is supported by the U.S. government through the DFC agency, which will help us attract investment and technology from funds and companies in the U.S., the EU and other countries that support our fight against the Russian enemy. Technology transfer and development is an important component of the Agreement, as we need not only investment but also innovation.
- The Agreement provides tax guarantees
The Fund’s income and contributions are tax-free in both the United States and Ukraine to ensure that investments yield the highest possible returns.
How the Fund will work
The United States makes a contribution to the Fund. In addition to direct funds, they can contribute NEW assistance, such as air defense systems for Ukraine.
Ukraine contributes 50% of the state budget revenues from NEW royalties on NEW licenses for NEW fields. Ukraine can also make additional contributions beyond this basic one, if it deems it necessary. We are talking about cooperation for decades to come.
The Fund then invests in mining and oil and gas projects, as well as related infrastructure or processing. Ukraine and the United States will jointly determine the specific investment projects to which the funds will be allocated. Importantly, the Fund can invest exclusively in Ukraine.
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The minerals agreement covers 57 types of minerals
The agreement sets out a list of minerals whose extraction it covers.
The Minerals Agreement covers 57 types of minerals. Assets related to natural resources means areas, reserves and deposits on the territory of Ukraine of aluminum, antimony, arsenic, barite, beryllium, bismuth, cerium, cesium, chromium cobalt, copper, dysprosium, erbium, europium, fluorine, fluorspar, gadolinium, gallium, germanium, gold, graphite, hafnium, holmium, indium, iridium, lanthanum, lithium, lutetium, magnesium manganese, neodymium, nickel, niobium, palladium, platinum, potassium, praseodymium, rhodium, rubidium, ruthenium, samarium, scandium, tantalum, tellurium, terbium, thulium, tin, titanium, tungsten, uranium, and vanadium, vanadium, ytterbium, yttrium, zinc, zirconium, oil, natural gas (including liquefied natural gas) and other minerals or hydrocarbons otherwise agreed upon by the principals.
It is also stipulated that in the event of new military assistance from the United States (including the transfer of weapons systems, ammunition, technology or training), the partner’s capital contribution will be considered increased by the estimated value of such military assistance.
