Canadian mining company Black Iron Inc. with assets in Ukraine, expects support for the investment agreement on the Shimanovsky iron ore project transferred to the Ministry of Economy as part of state support for projects with significant investments, the so-called “investnyan”.
“Black Iron recently received feedback that the Ministry of Economy is currently reviewing the agreement to support the company’s investments (“investment agreement”) and generally supports it. The next steps are to receive written comments on the proposed investment agreement from the Ministry of Economy, finalize the text in the mandatory document, which will be sent to the Cabinet of Ministers of Ukraine for approval and signing,” states a press release from Black Iron Inc.
As explained, Black Iron Inc. expects that this investment agreement, in addition to VAT and import duty benefits, will facilitate obtaining the necessary rights to allocate land.
The company positively assesses the appointment of the new Minister of Defense of Ukraine Rustem Umerov, who previously worked at the State Property Fund and was involved in the sale of state assets to private investors, and before that worked as an investment banker at ASTEM, so he has practical experience working with the international investment community.
The press release indicates growing interest in continuing to reconstruct Ukraine in a more environmentally friendly way, including through the production and use of “green steel.” It is noted that Black Iron is ideal for the production of high-purity iron ore necessary for the production of crude steel, which is produced by the direct reduction of iron process.
As reported, Black Iron Inc. continues to promote the Shimanovsky iron ore project, having identified a priority direction in the form of concluding an investment agreement with the government of the country. The main issue remains obtaining the use of a land plot under the jurisdiction of the Ministry of Defense. Discussions with the department led to an agreement on a preliminary amount of funds that Black Iron would have to pay as compensation for obtaining this plot of land for its use.
Black Iron also said it is considering new potential projects.
In October 2010, Black Iron acquired the Cypriot subsidiary Geo-Alliance Ore East Limited, along with licenses, from the EastOne investment group of Ukrainian businessman Viktor Pinchuk, for $13 million, then renamed it BKI Cyprus. Main assets - 99% in Shimanovskoe Steel LLC and Zelenovskoe Steel LLC (both Dnepr).
In July 2013, after a number of problems with the implementation of the Black Iron Inc. project. announced an agreement with the largest Ukrainian mining and metallurgical group Metinvest to develop its iron ore assets. Metinvest B.V. paid Black Iron Inc. $20 million and acquired 49% in BKI Cyprus. However, Metinvest later withdrew from the project.
The Shimanovskoye iron ore deposit is surrounded by five other operating mining enterprises, including the ArcelorMittal iron ore complex. Existing infrastructure, including access to electricity, rail and port facilities, according to Black Iron, will allow the project to quickly progress to the production stage.
According to a presentation from May 2021, the expected capital investment in the launch of the first stage is estimated at $452 million, the second - $364 million. The project involved the construction of a factory for the production of premium iron ore raw materials with an iron content of over 68% with a capacity of 4 million tons per year at in the first stage and 8 million tons per year in the second.