By Anatoliy Amelin, Co-founder and Director of Economic Programs at the Ukrainian Institute for the Future (UIF)
The newly signed resource agreement between Ukraine and the United States opens up new prospects for Ukraine’s economic development, especially in the field of mineral extraction and processing.
Let’s examine the main aspects of this document, its potential benefits, risks, and the next steps for its implementation.
Essence of the Agreement
This agreement is a document that regulates the creation of a joint fund to finance the development of strategically important minerals in Ukraine.
Key features of the agreement:
- The agreement covers more than 30 types of minerals;
- The fund to be created is not a debt instrument but an investment tool for the U.S.;
- Equal management rights between Ukraine and the U.S. are maintained;
- The fund’s resources are intended for investment and Ukraine’s recovery;
- The fund will be filled with revenues from new mineral extraction and processing projects, as well as from U.S. assistance to Ukraine and additional raised funds.
Advantages of the Agreement
Investment opportunities
- Attraction of new investments into Ukraine’s extractive sector.
- Equal management: Ensures parity in managing the joint fund.
- Investment nature: Resources are used for internal investment.
- Diversified income sources:
The fund will be filled through:
- license fees,
- royalty payments,
- potentially — taxes from new projects.
Comprehensive development:
- The agreement covers not only mineral extraction but also processing and infrastructure projects.
Potential Risks
Revenue distribution issues:
According to the Constitution of Ukraine, natural resources belong to its citizens. Therefore, there is a risk that they may not receive fair benefits from the use of these resources.
Raw-material economy risk:
If Ukraine focuses solely on extraction for export without processing, the economic benefit of the agreement will be minimal.
Next Steps
Implementation steps include:
- Legislative formalization: Adoption of a law on the fund's operation.
- Mechanism development: After the bill is approved by parliament, a detailed operational framework for the fund can be outlined.
Development Prospects
To gain the maximum benefit from the agreement, Ukraine must ensure conditions for:
- Full production cycle: Including not only extraction but also processing within Ukraine.
- End-product manufacturing: For example, production of titanium goods for aviation or medical implants.
- Development of high-tech sectors: Such as manufacturing components for microelectronics.
- Nuclear industry: Although uranium is not included in the list of critical materials, it is important to develop a full nuclear fuel production cycle in Ukraine.
The key task for the Ukrainian side is to “do its homework” — to create conditions where mineral processing and investment in these sectors deliver maximum economic benefit to the country.