Preparations are currently underway for a production-sharing agreement (PSA) for the “Dobra” lithium deposit, won in the development competition by Dobra Lithium. This is a special type of contract under which the investor conducts exploration and invests in extraction at their own expense, while the state provides the right to use the subsoil and receives a share of the extracted product or revenue.
This was explained by Ukraine’s Minister of Economy, Environment, and Agriculture, Oleksiy Sobolev, in an interview with Deutsche Welle.
“Currently, the agreement does not exist. Its draft will be developed and agreed upon between the parties over the course of one year, in accordance with Ukrainian law. However, we plan to finalize the agreement within a few months,” Sobolev emphasized.
The minister noted that the agreement will provide the investor with 70% of the production during the initial—compensation—phase. This phase continues until the investor recovers their capital expenditures. The remaining 30% is divided as follows: 96% to the investor and 4% to the state.
During the main phase of the project, starting from the fourth or fifth year of lithium concentrate production, the compensation production is expected to drop from 70% to approximately 30% of the produced value. The remaining 70% will be divided as follows: 6% to the state and 94% to the investor.
“The agreement will be concluded for a term not exceeding 50 years. The minimum threshold for submitting a bid was the investor’s commitment to allocate $12 million for new geological exploration and an international audit of reserves, and an additional $167 million for organizing extraction and processing if industrial reserves are confirmed,” the minister added.
“The total investment in the initial stages of developing the ‘Dobra’ lithium deposit could reach $700 million, and if a lithium hydroxide production project is built and implemented, it could exceed $1.8 billion,” Oleksiy Sobolev said.
