Attracting foreign investment requires predictable approaches from the state in the field of tax and tariff policy. Without fulfilling these conditions, it will be difficult for Ukraine to interest large players in investing money in domestic enterprises, said Oleksandr Vodoviz, Head of the Metinvest Group CEO Office, during the conference “Strategic Resources of Ukraine: Scenarios for the Development of the Subsoil Use Industry”.
He noted that the business in the field of extraction and processing of minerals is quite capital-intensive, so a potential investor must immediately invest a significant amount of money in the development of the enterprise. Only large international players can use such resources, but a certain stability and predictability of state decisions are important for them.
“Ukraine is all covered with minerals. But this business is not about hundreds of millions, but about billions of dollars. Will an investor who is a representative of medium or small business come to this area. No, these should be large corporations. Because in order to develop a deposit and get this mineral, you need to spend billions of dollars. For example, to develop a mine like the one in Pokrovsk, it will take about $10 billion. Initial investments in such projects can amount to about $3-4 billion. This is just to get underground. Is there a company in the world that would want to invest this money when transportation tariffs, electricity transmission tariffs, and taxes are constantly changing? In order for investments to happen, there must be some stability,” Vodoviz noted.
It is also worth considering that projects in the mining industry have a very long payback period. He mentioned data from the Ernst&Young presentation, which was also demonstrated during the event, according to which the investor’s path from obtaining a license and drawing up permitting documentation to launching enrichment production takes an average of 18 years.
“The best criterion for whether everything is going well in our country from the point of view of the mining industry is how many new mines and enrichment plants have been opened in Ukraine over the past 20 years. Yes, we have some projects at the feasibility stage. And there are zero ready-made ones. That is the answer,” Vodoviz noted.
Now, according to his assessment, the situation is such that Ukrainian business is rather investing its own funds in the development and support of existing enterprises. “We sell abroad and invest here from there. We have an average of $1 billion in investments per year. Are there many businesses that can invest that kind of money only in supporting current activities?, Vodoviz asked.
In addition, he drew attention to the fact that working in wartime conditions adds to the difficulties of business and asked the government to take this into account, including in the process of integration and implementation of European legislation.
“Brussels’ position is very tough. What it consists of is: there is EU legislation and you either accept it or you don’t. And these are not negotiations. What is worrying is the position of our government officials, who agree with it and tell business that they cannot do anything about European requirements. But we have a war, a completely different economic situation. For example, metallurgical plants in Europe are given grants for environmental modernization. We don’t have that. And we can’t meet European standards. I ask government officials to pay attention to this,” he concluded.