US-Ukraine minerals deal, profits may not come for another 10 years - Reuters
Investors face numerous obstacles (Photo: Getty Images)
Recently, the US and Ukraine signed a minerals deal. However, the financial return is likely to take decades, or even longer, reports Reuters.
The problem lies in the fact that investors face numerous obstacles when starting new mines in a war-torn country.
Mining industry consultants provided an example to the agency. According to them, developing mines that extract strategically important minerals in countries with well-developed mining industries, such as Canada or Australia, can take between 10 to 20 years.
The problem also lies in the fact that investors face numerous obstacles when launching new mines in a war-torn country.
Reuters reports that most of the mineral deposits in Ukraine lack sufficient data to confirm their economic viability. Moreover, investors might hesitate to invest in a country where infrastructure, such as electricity supply and transportation, has been destroyed by Russia's full-scale invasion, and where future security is not guaranteed.
"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 the minerals division at consulting firm Benchmark Minerals Intelligence.
Moreover, Willis Thomas from the consulting firm CRU explained that generating income requires a long time and significant financial investment.
"The transition from a discovered resource to an economically viable reserve requires significant time and investment, both of which have been constrained, not only since the onset of the war but even prior to it," he said.
US-Ukraine minerals deal
On the night of May 1, it became known that Ukraine and the US signed an economic cooperation agreement (commonly referred to as the minerals deal). The document was signed by Ukraine’s Minister of Economy, Yulia Svyrydenko, and US Treasury Secretary Scott Bessent.
"Together with US Secretary of the Treasury Scott Bessent, I signed the Agreement on the Creation of the US-Ukraine Reconstruction Investment Fund," Svyrydenko said in a statement.
Both parties emphasized that the agreement is beneficial to both countries.
