Profit from Ukraine-US mineral resources deal may not be seen for another 10 years – Reuters

Financial benefit from the mineral resources deal between Ukraine and the United States may not materialise for at least another 10 years. The war, destroyed infrastructure and a lack of geological surveys significantly undermine the prospects for developing the deposits.

Source: Reuters

Details: Despite official statements about the political importance of the agreement signed between Ukraine and the United States regarding the development of Ukraine's mineral resources, actual profits from it are unlikely to appear anytime soon. According to industry experts, development in countries with advanced mining sectors, such as Canada or Australia, takes between 10 and 20 years. In the case of Ukraine, this period may be even longer due to a number of obstacles.

Infrastructure – energy, transport and logistics – has suffered significant destruction due to the three-year full-scale war. Most of the deposits still lack comprehensive geological surveys that would confirm the economic viability of their development. In addition, potential investors may be discouraged from investing in a country at war.

"If anyone's thinking suddenly all these minerals are going to be flying out of Ukraine, they're dreaming. The reality is it's going to be difficult for people to justify investing money there when there are options to invest in critical minerals in countries that are not at war," said Adam Webb, Head of minerals at consultancy Benchmark Minerals Intelligence.

Quote: "Another hurdle is that some potentially lucrative projects are on land occupied by Russia, and the agreement does not include any security guarantees. Washington has said the presence of US interests would deter aggressors."

Details: According to Ukraine's Finance Ministry, the state received 47.7 billion hryvnias (about US$1 billion) in royalties and other payments related to the use of natural resources in 2024.

However, revenues from the new US-Ukrainian joint fund will only apply to licences granted under the new rules introduced by the agreement.

The historical pace of licence issuance also does not inspire optimism: Ukraine issued approximately 20 licences for oil and gas, one for graphite, one for gold, two for manganese and one for copper from 2012 to 2020.

Background: 

• On the night of 30 April-1 May, marking the end of Donald Trump's hundredth day in office, Ukraine and the United States signed the mineral resources deal.
• On 1 May, the Cabinet of Ministers of Ukraine submitted to the Verkhovna Rada (Ukrainian Parliament) a draft law on ratification of the agreement between Ukraine and the United States regarding the establishment of the US-Ukraine Reconstruction Investment Fund.
• Yuliia Svyrydenko, First Deputy Prime Minister and Economy Minister, stated that the US-Ukraine Reconstruction Investment Fund, which is being created within the framework of the mineral resources deal, might begin operating just a few months after its ratification in the Verkhovna Rada.

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