On December 18, 2024, the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine onUpdating the National Program for the Development of the Mineral and Raw Materials Base of Ukraine for thePeriod Until 2030 and Regulating Certain Issues Regarding Minerals and Components of Strategic and CriticalImportance” № 4154-ІХ (the draft law No. 6227 of October 27, 2021) was adopted in the second reading and asa whole. On January, 2025, the  Law is signed by the President of Ukraine, Among other things, the said law is aimed at implementing several measures provided  by the Plan of Ukraine (Ukraine Facility), in particular, in the context of strategic and critical minerals and components.

Amendments to the National Program for the Development of theMineral and Raw Materials Base until 2030 and the Plan of Ukraine

To update the National Program for the Development of the Mineral and Raw Materials Base until2030, which was approved by the Law of Ukraine No. 3268-VI of April 21, 2011 , in October 2021, the Verkhovna Rada of Ukraine introduced draft law No. 6227. For a long time, the draft law remained without consideration, in particular because of full-scale invasion, but on June 4, 2024, the draft law was adopted in the first reading.

Its adoption (with a deadline of the fourth quarter of 2024) was included in the Indicators of the Plan of Ukraine . According to the document above, the changes to be made by the Law of Ukraine“On Amendments to the National Program for the Development of the Mineral and Raw MaterialsBase until 2030” should primarily concern the following issues: introduction of a state compensation fund in the geological sphere, prioritization of the goals of the extractive industry in accordance with the European Union strategy for critical raw materials and the definition of strategic and critical raw materials, the need for regular methodological risk assessment of the level of security of their supply, and the definition of a group of partner countries in their development and processing.

Considering the fact that the first version of the draft law was registered in the Verkhovna Rada ofUkraine even before the start of the full-scale invasion, as well as before the approval of the Plan ofUkraine, the draft law was largely changed both in order to meet the tasks defined in the Plan ofUkraine, as well as updating the Program as a whole.

Introduction of a state compensation fund in the geological sector

The amendments to the National Program for the Development of the Mineral and Raw Materials Base until 2030 provide for the introduction of a separate source of implementation of the program's activities - the budget program for the Development of the Mineral and Raw Materials Base of Ukraine (state compensation fund in the geological sphere). Funding from this source can be used to restore and increase mineral resources, in particular, search for or further exploration of promising mineral deposits of strategic and critical importance.

The amendments to the National Program stipulate that the sources of funding for the relevant fund should be part of the funds from:

• rent for the use of subsoil of national importance, in particular hydrocarbons, in the amount of0.25 percent;
• fee for issuing special permits for the use of subsoil without holding auctions and selling special permits for the use of subsoil at auctions in the amount of 10 percent;
• other revenues determined by the Law on the State Budget of Ukraine.

Introduction of definitions of minerals and components of strategic and critical importance

The law amends Article 6 of the Subsoil Code of Ukraine, which introduces definitions of minerals and components of strategic and critical importance.

Minerals and components of strategic importance may be included by the Cabinet of Ministries of Ukraine the minerals of national importance and their useful components, deposits of which have been explored or can potentially be explored on the territory of Ukraine, under the following conditions:

• such minerals and components are of strategic importance as mineral raw materials and/or processed products from such mineral raw materials for domestic existing or promising industrial productions, which ensure sustainable development of the economy, in particular export potential, and the defense capability of the state, its economic security in the longterm and the development of an innovative and technological system, contributing to the decarbonization of sectors of the economy and the transition to ecological mobility;
• the supply of such minerals (their useful components) as mineral raw materials and/or processed products from such mineral raw materials on the world market has or may have a potentially significant gap from the forecasted demand, which is, in particular, due to the duration of the implementation of new projects for the extraction (industrial development) of deposits of such minerals.

The list of minerals and components of critical importance the Cabinet of Ministries of Ukraine includes the following minerals:

• metallic ores or non-metallic minerals components) of national importance (their useful componets), included by the Cabinet of Ministers of Ukraine in the list of minerals and components of strategic importance;
• other metallic ores or non-metallic minerals of national importance (their useful components), which are of great importance as mineral raw materials and/or processed products from such mineral raw materials for domestic existing or prospective industrial productions, which ensure sustainable development of the economy and the defense capability of the state, for which there is no substitute as mineral raw materials and/or processed products from such raw materials (at the current level of technological development) and at the same time there is a high risk of interruptions in the supply of such mineral raw materials and/or processed products from such mineral raw materials to Ukraine.

The relevant definitions are consistent with similar definitions included in Regulation (EU) 2024/1252 (Critical Raw Material Act).  

The specified lists are approved by the Cabinet of Ministers of Ukraine, as well as the corresponding lists of subsoil areas (mineral deposits) of strategic and (or) critical importance, which will be provided for use by holding an auction (electronic bidding) for the sale of a special permit for the use of subsoil and holding a competition for the conclusion of production sharing agreements. It is also envisaged that the Government will approve a number of methodologies on the specified issues.

Introduction of special procedures for obtaining the right to use subsoil areas (deposits) of strategic and critical minerals

The law introduces several amendments to the Code of Ukraine on Subsoil in terms of establishing special procedures for obtaining the right to use subsoil areas (deposits) of strategic and critical minerals.

Thus, the amendments to Article 13 establish additional (to those already provided) require ments for persons (entities) who have the right to acquire such a right; namely, such persons must additionally meet at least one condition:

1) is a citizen of Ukraine;

2) is a citizen or natural person - a resident of a member state of the Organization for EconomicCooperation and Development, or another state with which Ukraine has concluded a memorandum(agreement) on partnership (cooperation) in the field of minerals of strategic and (or) critical importance;

3) is a legal entity – resident of Ukraine or a member state of the Organization for EconomicCooperation and Development, or another state with which Ukraine has concluded a memorandum(agreement) on partnership (cooperation) in the field of minerals of strategic and (or) critical importance, provided that in such legal entity:

significant participation is held by Ukraine or a member state of the Organization for EconomicCooperation and Development, or another state with which Ukraine has concluded a memorandum(agreement) on partnership (cooperation) in the field of minerals of strategic and (or) critical importance, and (or)

significant participation is held by legal entities registered in Ukraine or a member state of the Organization for Economic Cooperation and Development, or another state with which Ukraine has concluded a memorandum (agreement) on partnership (cooperation) in the field of minerals of strategic and (or) critical importance, and (or)

significant participation is held by or is held by the ultimate beneficial owners are citizens ofUkraine, or individuals who are citizens or residents of a member state of the Organization forEconomic Cooperation and Development, or another state with which Ukraine has concluded a memorandum (agreement) on partnership (cooperation) in the field of minerals of strategic and (or) critical importance.

Also, the right to use subsoil areas (deposits) of minerals of critical and strategic importance maybe granted to associations of legal entities that meet the described criteria.

Ensuring environmental protection during subsoil use

The Law also makes amendments to the National Program for the Development of the Mineral andRaw Materials Base of Ukraine until 2030, aimed at ensuring that environmental protection needsare taken into account when using subsoil resources.

In particular, the Program has been supplemented with a relevant chapter, which enshrines the importance of taking into account the requirements of environmental legislation, in particular, theLaw of Ukraine "On Environmental Impact Assessment" and the Law of Ukraine "On the Basic Principles of State Climate Policy" when implementing actions aimed at expanding the mineral resource base.

DISCLAIMER: The general information provided in this Newsletter is not legal advice, cannot be cited as legal authority, and cannot replace the advice of a lawyer who has reviewed the facts of your case. The information provided is intended to be accurate as of the date of publication, but please be aware that laws are constantly changing.