Total investment in the initial stages of development of the Dobra lithium deposit could amount to USD 700 million, says Oleksii Sobolev

A production sharing agreement (PSA) is currently being prepared for the Dobra lithium deposit, with Dobra Lithium winning the tender for its development. This is a special type of agreement under which the investor conducts exploration and invests in production at its own expense, while the state grants the right to use the subsoil and receives a share of the extracted products or income.

This was announced by Oleksii Sobolev, Minister of Economy, Environment and Agriculture of Ukraine, in an interview with the Deutsche Welle.

"There is no agreement at the moment. Its draft will be developed and agreed upon by the parties within one year, in accordance with Ukrainian legislation. But we plan to conclude an agreement within a few months," Oleksii Sobolev emphasised.

The Minister noted that the deal would provide for the investor to receive 70% of the products at the first stage, which is the compensation stage. This stage shall continue until the investor recoups its capital costs. The remaining 30% would be divided proportionally: 96% to the investor and 4% to the state.

During the main stage of the project, starting from the fourth or fifth year of lithium concentrate production, the compensation product indicator is expected to be not 70%, but about 30% of the cost of the products manufactured. 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 an application was the investor's commitment to allocate USD 12 million for new geological exploration and international audit of reserves, and another USD 167 million for the organisation of extraction and enrichment in case of confirmation of industrial reserves of the deposit," the Minister added.

"The total investment in the initial stages of development of the Dobra lithium deposit may amount to USD 700 million, and during the construction and implementation of the lithium hydroxide production project, it may exceed USD 1.8 billion," explained Oleksii Sobolev.