US and Ukraine earmark $150 million for minerals deal
Washington and Kyiv will invest $75 million each to kickstart the Ukraine reconstruction investment fund that gives the U.S. special access to mineral sites and other projects in Ukraine, the Economy Minister Oleksii Sobolev told journalists on Sept. 17.
The U.S. International Development Finance Corporation (DFC), which is constructing the fund’s framework alongside Kyiv, will provide Washington’s contribution. Kyiv will split its $75 million share between this year's budget and next year's, the minister said.
"This is definitely enough to make the first proper large-scale investments," Sobolev said.
While the $150 million has been committed, companies can't start submitting projects for financing until at least late November. By then, the fund's board is expected to have hired an administrator, opened bank accounts, and approved investment guidelines.
"The fund will act as a kind of beacon — when it invests in a project, it will enable the DFC to invest both equity and debt financing and allow other international institutions to invest as well," said Sobolev.
The fund will operate on a pay-as-you-go basis, with both sides contributing their share only once a project is authorized. For example, in a $20 million project, the U.S. would put in $10 million, followed by $10 million from Ukraine.
The announcement marks the next major step forward in the resources deal since the fund’s six board managers met for the first time on Sept. 3. The following week, a DFC delegation arrived in Ukraine and began scouting starter projects, including a titanium, zirconium, and hafnium deposit on Sept. 15.
"Our $75 million investment is a major step to activating the fund and opening the Ukrainian market to new investment opportunities," Mateo Goldman, DFC’s Senior Vice President for Investments, told the Kyiv Independent.
Prime Minister Yuliia Svyrydenko, then economy minister, earlier told the Kyiv Independent in July in an interview that the initial seed funding would be around $25 million.
Kyiv and Washington signed a deal on April 30 giving the U.S. favorable access to investment projects in Ukraine, spanning natural resources, related infrastructure, and even defense projects. For the first ten years, profits from the reconstruction investment fund will be fully reinvested in Ukraine’s economy.
The American side is particularly interested in Ukraine’s critical raw materials, like lithium, and gas projects, including establishing new wells, said Sobolev. Expanding gas extraction is easier than launching new mining projects that can take over 10 years to generate profits, he added.
The agreement guarantees Washington the right to be notified of potential deals and to negotiate. Companies are not required to grant preferential terms and remain free to sell to other buyers.
"This first significant contribution is a sign of trust and long-term commitment of our partners. American investments can be a guarantee of security both for Ukraine and for American business in Ukraine," Prime Minister Yulia Svyrydenko said in a press release.
