Ukraine-US deal on subsoil will not bring results in the next decade

Agreement between the US and Ukraine on subsoil development. Photo: Nadra info

The agreement between the US and Ukraine on subsoil development will not have significant results in the extractive industry for at least ten years and will require significant private investment to launch projects.

The Financial Times writes about this, citing estimates by industry representatives.

Experts predict that the full implementation of mining will take 10-15 years. It is expected that similar timeframes will be required for the discovery and development of deposits, which affects the prospects for supply chain security.

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Peter Bryant, chairman of mining consultancy Clareo, said the «agreement does little to mitigate supply chain risks in the next 10 years, as it will take at least as long to discover and develop» mines in Ukraine.

Ukraine's natural resources include iron ore, coal, lithium, graphite and titanium ores. The country is also a significant producer of natural gas. Oil and gas production may progress faster than mining projects, although the military conflict, geological uncertainty, damaged infrastructure, and possible corruption risks remain significant obstacles. Full production under the agreement is expected to begin after 2040.

A serious obstacle is access to Soviet-era geological exploration data that reflects Ukraine's mineral wealth, much of which is classified due to the war. Experts also note that, given the long history of mining in Ukraine, the best deposits may already be developed.

The final terms of the deal will depend on political and security factors, including the prospects for a ceasefire and maintaining control over the deposits. Some analysts believe that the first investments will be directed to energy projects that require less time to implement. At the same time, even Ukraine's supporters acknowledge the significant difficulty of getting extractive initiatives off the ground.

Some observers believe that energy projects, which can have shorter implementation timescales, are likely to be among the first to be developed under this framework.

«However, even Ukraine's supporters acknowledge that the road ahead is difficult. Andrew Forrest, an Australian mining tycoon who has donated A$25 million to help Ukraine since the start of the war, said his company «sees nothing» in terms of mining projects in the country», the publication writes.

As a reminder, on Tuesday, 13 May, the Verkhovna Rada of Ukraine passed in the first reading a bill that will allow the financial terms of the Ukraine-US Minerals Agreement to be fulfilled.

Earlier, First Vice Prime Minister of Economy Yulia Svyrydenko explained how the US Recovery Investment Fund will work. According to her, the fund can finance mining projects, but will not be involved in mining itself.

As a reminder, on 1 May, Minister of Economy of Ukraine Yuliia Svyrydenko and US Treasury Secretary Scott Bessent signed an agreement between the two countries to establish the Recovery Investment Fund.

The bilateral agreement between Ukraine and the United States signed in Washington establishes a political framework for cooperation in the field of subsoil development.

Subsequently, the Cabinet of Ministers of Ukraine published the full text of the agreement on cooperation in the field of subsoil use, which was signed with the US government on 1 May in Washington.