Ukraine has begun preparations for a production sharing agreement regarding the lithium deposit ‘Dobra’, with Dobra Lithium being selected as the winning company in the competition. Under the terms of such an agreement, the investor independently finances geological research and extraction, while the state grants the right to use the subsoil in exchange for a portion of the product or revenue.
This is reported by Finway
Terms of the Future Agreement and Stages of Cooperation
The details of the upcoming cooperation were shared by the Minister of Economy, Environment, and Agriculture of Ukraine, Oleksiy Sobolev. According to him, the draft agreement will be developed and agreed upon between the parties over the course of a year, however, the authorities plan to finalize it in the coming months.
“Currently, there is no agreement. Its draft will be developed and coordinated between the parties over one year, in accordance with Ukrainian legislation. But we plan to conclude the agreement within a few months,” Sobolev emphasized.
According to the terms, at the first — compensation — stage, the investor will receive 70% of the product. This period will last until the investor compensates their own capital investments. After that, 30% of the product will be distributed as follows: 96% to the investor, 4% to the state.
Investments and Project Implementation Timeline
The main stage of the project will begin in the fourth or fifth year of lithium concentrate production. During this time, the share of compensation product will decrease to about 30% of the value, while the remaining 70% will be distributed in a ratio of 6% for the state and 94% for the investor.
“The agreement will be concluded for a term of no more than 50 years. The minimum threshold for submitting an application was the investor’s commitment to allocate $12 million for new geological exploration and international audit of reserves, and an additional $167 million for organizing extraction and enrichment in case of confirmation of industrial reserves of the deposit,” the minister added.
According to Oleksiy Sobolev, in the initial stages of developing the lithium deposit ‘Dobra’, the volume of investments could reach $700 million. In the event of a successful launch and development of lithium hydroxide production, total investments could potentially exceed $1.8 billion.