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8 out of 10 subsoil users consider the industry to be investment attractive

21/ 10/ 2024
  Among the surveyed subsoil users, 78% view the industry as investment attractive, and they rate Ukraines resource potential at 8.02 out of 10. In comparison, last year, 82% of respondents rated the investment attractiveness of the industry highly. These results are shown in the survey Subsoil Use in the Context of War and Development Prospects conducted by the European Business Association among its member companies operating in the subsoil use sector. View the presentation Additionally, 71% continue to invest in Ukrainian subsoil even during the war, 13% are in the decision-making stage, and 16% are not investing. However, these figures have somewhat worsened compared to last year when 74% of companies reported investments, and only 8% were not investing. During 2023-2024, 51% of the surveyed companies invested up to $5 million/euros in the subsoil, and 11% invested over $5 million. Only 16% of respondents use financial instruments from international organizations like MIGA, DFC, IFC, USAID, EBRD, and BGK to support their activities, while 24% are considering this option but have yet to make a decision. Meanwhile, 21% are unaware of these instruments. Most companies in the subsoil use market continue their activities. The operations of 60% of companies have been fully or partially restored (54% last year), while 21% are still halted. Only 19% of the surveyed companies have not felt the impact of military actions. This year, unlike 2022-2023, 12% of surveyed companies report revenue growth for the first time. In 16%, the revenue level remained unchanged, while in all others, it declined. Specifically, 38% of companies reported a decrease of up to 50% in revenues, 15% reported a decrease of 50-75%, and 19% reported a decrease of more than 75%. This trend shows a gradual improvement in the financial condition of subsoil users. The number of enterprises that consider the regulatory environment in the subsoil use sector satisfactory has slightly decreased, from 63% last year to the current 52%. Meanwhile, 44% of respondents consider it unsatisfactory (26% last year). Another 4% rate it positively, whereas 11% of respondents had such an opinion in the previous survey. Two out of the three main challenges for subsoil users remain unchanged from last year: power outages and high risks for international investment. However, logistical difficulties, relevant last year, have been replaced by the challenge of mobilizing key workers and workforce shortages. Currently, 96% of companies experience the negative impact of workforce shortages and the difficulties of reserving military personnel. In the context of Ukraine-EU cooperation, 18% of survey participants believe that Ukraine’s subsoil use legislation is aligned with EU standards, while 57% believe it requires significant improvements. Respondents rate the prospects for a strategic partnership with the EU in the field of critical raw materials at 3.33 out of 5. Subsoil users identify the necessary stimuli for industry development as a quality regulatory environment (65% of respondents), property rights protection (59%), and foreign investment (47%). Svitlana Mykhailovska. Deputy Director of the European Business Association. Despite the ongoing war and business risks, revenue growth in some companies is a positive signal for business environment development. At the same time, companies expect improvements in the regulatory environment to boost economic activity in the industry, particularly in the context of EU integration. Dmytro Kashchuk. Head of the EBA Subsoil Use Committee, Business Development Director of the Geological Investment Group. The workforce shortage caused by the mobilization of key employees has become a new threat to the industry this year. This not only complicates companies′ operational activities but also creates long-term consequences for their development. Without proper workforce potential, the restoration and modernization of the industry may slow down. Despite all the wartime circumstances, most companies continue to invest in subsoil, indicating strong confidence in Ukraine′s resource potential. Although investment attractiveness has somewhat declined compared to the previous year, 71% of enterprises continue to invest, showing optimism about the industry′s development prospects and its inevitable success. For reference: The study Subsoil Use in the Context of War and Development Prospects has been conducted by the European Business Association since 2023. In 2024, the survey was conducted from September 3 to October 2, with 68 member companies operating in the subsoil use sector participating.

Among the surveyed subsoil users, 78% view the industry as investment attractive, and they rate Ukraine’s resource potential at 8.02 out of 10. In comparison, last year, 82% of respondents rated the investment attractiveness of the industry highly.

These results are shown in the survey “Subsoil Use in the Context of War and Development Prospects” conducted by the European Business Association among its member companies operating in the subsoil use sector.

View the presentation

Additionally, 71% continue to invest in Ukrainian subsoil even during the war, 13% are in the decision-making stage, and 16% are not investing. However, these figures have somewhat worsened compared to last year when 74% of companies reported investments, and only 8% were not investing. During 2023-2024, 51% of the surveyed companies invested up to $5 million/euros in the subsoil, and 11% invested over $5 million.

Only 16% of respondents use financial instruments from international organizations like MIGA, DFC, IFC, USAID, EBRD, and BGK to support their activities, while 24% are considering this option but have yet to make a decision. Meanwhile, 21% are unaware of these instruments.

Most companies in the subsoil use market continue their activities. The operations of 60% of companies have been fully or partially restored (54% last year), while 21% are still halted. Only 19% of the surveyed companies have not felt the impact of military actions.

This year, unlike 2022-2023, 12% of surveyed companies report revenue growth for the first time. In 16%, the revenue level remained unchanged, while in all others, it declined. Specifically, 38% of companies reported a decrease of up to 50% in revenues, 15% reported a decrease of 50-75%, and 19% reported a decrease of more than 75%. This trend shows a gradual improvement in the financial condition of subsoil users.

The number of enterprises that consider the regulatory environment in the subsoil use sector satisfactory has slightly decreased, from 63% last year to the current 52%. Meanwhile, 44% of respondents consider it unsatisfactory (26% last year). Another 4% rate it positively, whereas 11% of respondents had such an opinion in the previous survey.

Two out of the three main challenges for subsoil users remain unchanged from last year: power outages and high risks for international investment. However, logistical difficulties, relevant last year, have been replaced by the challenge of mobilizing key workers and workforce shortages. Currently, 96% of companies experience the negative impact of workforce shortages and the difficulties of reserving military personnel.

In the context of Ukraine-EU cooperation, 18% of survey participants believe that Ukraine’s subsoil use legislation is aligned with EU standards, while 57% believe it requires significant improvements. Respondents rate the prospects for a strategic partnership with the EU in the field of critical raw materials at 3.33 out of 5.

Subsoil users identify the necessary stimuli for industry development as a quality regulatory environment (65% of respondents), property rights protection (59%), and foreign investment (47%).

Svitlana Mykhailovska Deputy Director of the European Business Association
Despite the ongoing war and business risks, revenue growth in some companies is a positive signal for business environment development. At the same time, companies expect improvements in the regulatory environment to boost economic activity in the industry, particularly in the context of EU integration.
Dmytro Kashchuk Head of the EBA Subsoil Use Committee, Business Development Director of the Geological Investment Group
The workforce shortage caused by the mobilization of key employees has become a new threat to the industry this year. This not only complicates companies′ operational activities but also creates long-term consequences for their development. Without proper workforce potential, the restoration and modernization of the industry may slow down. Despite all the wartime circumstances, most companies continue to invest in subsoil, indicating strong confidence in Ukraine′s resource potential. Although investment attractiveness has somewhat declined compared to the previous year, 71% of enterprises continue to invest, showing optimism about the industry′s development prospects and its inevitable success.

For reference:

The study “Subsoil Use in the Context of War and Development Prospects” has been conducted by the European Business Association since 2023. In 2024, the survey was conducted from September 3 to October 2, with 68 member companies operating in the subsoil use sector participating.

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