**Ukraine Overhauls Minerals Sector to Attract Billions in Investment**
As Ukraine continues to grapple with the devastating effects of three years of war, its government is working on a major overhaul of its minerals sector. The aim is to unlock potential and attract billions of dollars in investment from a deal with the United States.
**A Rich Resource Base, but Underdeveloped**
Ukraine has significant deposits of 22 out of 34 critical minerals deemed essential by the European Union for industries such as defense, high-tech appliances, and green energy. However, much of this sector is underdeveloped due to Soviet-era bureaucracy and lack of investment.
**A Deal with the United States**
After months of negotiations, Kyiv and Washington agreed a minerals deal in April that created a fund to invest in minerals projects. The fund will receive money from new mining licenses issued by Ukraine and will be active as of May 23.
Ecology Minister Svitlana Hrynchuk told Reuters that the government hopes this fund will significantly increase the mineral industry’s potential, despite extraction being a capital-intensive and long-term process.
“We really hope the agreement will draw more attention to this sector and make foreign investment more understandable and more attractive,” she said.
**The War’s Heavy Toll**
With about half of its mineral wealth and a fifth of its territory under Russian occupation, Ukraine has lost most of its coal deposits, as well as some lithium and manganese deposits. The government estimates that the sector has suffered losses of around $1.7 trillion due to the conflict.
**Revamping the Sector**
To move forward, Ukraine is updating its strategy for the resources sector, focusing on improving access to information and data on geological exploration, reducing bureaucracy, and finalizing lists of critical and strategic minerals crucial for the economy.
The government is also working with international partners such as the European Commission and the European Bank for Reconstruction and Development on a project to digitize up to 80% of Soviet-era geological data. This task is about 40% complete.
**Reviewing Mining Licenses**
Ukraine is reviewing its existing 3,000 mining licenses, with Hrynchuk estimating that around 10% could be dormant. The government aims to launch these licenses back into circulation and auction new ones to attract investment.
**A Bright Future?**
Despite wartime challenges, the government continues to auction mining licenses and hopes to raise a similar amount of money this year as it did last year. Investors are mostly interested in licenses for oil and gas exploration and minerals such as titanium, graphite, and manganese.
The U.S. minerals deal was agreed despite a clash between President Volodymyr Zelenskiy and Trump during their meeting in February. Final documents were exchanged last week, but projects will take time to materialize.
The minerals deal is seen as a full economic partnership that hands the United States preferential access to new Ukrainian minerals accords and will help fund Ukraine’s reconstruction.
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