Ukraine pledges $48mn in annual payments to joint subsoil fund with US

The Ukrainian government plans to allocate up to UAH2bn  ($48mn) annually to a future US-Ukrainian subsoil fund, Deputy Economy Minister Taras Kachka announced on May 8.

The creation of the fund was agreed as part of the US-Ukraine minerals deal signed on April 30 – seen as a key precursor to a potential peace deal between Kyiv, Washington and Moscow.

Kachka explained that the contributions will come from future payments derived from the sale of mineral extraction licences. When a new field is discovered and rental payments begin flowing into the state budget, half of these revenues may be directed to the fund. The total annual contributions are expected to range from UAH1-2bn.

The US will provide initial funding to kick-start the fund, with potential for additional investments based on its activity, Kachka added.

The Ukrainian Cabinet published the text of the deal with the US on subsoil use on May 1. Some media outlets and members of the Verkhovna Rada criticised the deal, claiming it undermines Ukraine’s economic sovereignty.

Critics pointed out that the agreement grants the US long-term priority access to Ukraine’s subsoil resources, while lacking the security guarantees previously promised by President Volodymyr Zelenskiy’s administration. However, the government noted that the agreement will be supplemented by various contracts specifying its terms.

First Deputy Prime Minister Yulia Svyrydenko stated that Ukraine will channel 50% of revenues from new rental payments and mining licences into the bilateral investment fund. The fund will be managed on an equal footing between the two parties, without imposing any direct debt obligations on Ukraine.

During the first decade, the fund will not distribute dividends; instead, all profits will be reinvested in mineral development, processing and infrastructure projects within Ukraine.

The agreement aims to balance fostering investment while maintaining a degree of state control over natural resources, according to the Ukrainian government.