Michael MacKay, Radio Lemberg, 31.01.2018
The Canada-Ukraine Free Trade Agreement (CUFTA) is aimed at eliminating trade barriers, such as tariffs, and creating opportunities for doing business and boosting investment in both countries. After many years of negotiations, CUFTA was fully implemented on 1 August 2017. From then on, it was time for promises to be kept. Less than five months later one big project has been implemented in Ukraine and an even bigger one has been announced. Doing business in Ukraine, Canadian businesses have opened a solar power plant and have plans to open an iron ore mine and processing facility. Free trade is starting to reap rewards for Canadian and Ukrainians.
The first investment from the Canadian side under the Canada-Ukraine Free Trade Agreement (CUFTA) was in a solar power project. TIU Canada has opened a 10.7 megawatts solar power plant in Nikopol, in the Dnipro region of Ukraine. The company installed 32,304 solar panels over 15 hectares of ground, in a project that took four months to complete. The anticipated cost of the project is $13 million. Free flow of electricity started right away, even though the solar power plant started operating on January 26 in the depths of the Ukrainian winter.
Canadian investment in Nikopol, a city of 120 thousand people on the banks of the Dnipro River, was the first foreign investment in that city in 50 years.
Ukraine has top tier conditions for solar power generation in the world. Ukraine is where the best return on investment is therefore achievable. Ukraine has the technical expertise and skilled workers needed for a collaborative, international, and specialized venture of this kind. Coming in on time and on budget, TIU Canada plans to advertise the success of its Nikopol solar power plant, to encourage other investors outside Ukraine and other partner businesses inside Ukraine. Michael Yurkovich, President of Refraction Asset Management which is the parent company for TIU Canada, announced a campaign to build as many as five more solar power plants in Ukraine in 2018, building on the success of the Nikopol experience.
A much larger investment by Canadians in Ukraine is in the offing, because of CUFTA. A Canadian mining company called Black Iron is ready to invest $1.1 billion in an iron ore mine and processing plant near Kryvih Rih in Dnipro region of Ukraine. This project would be the largest foreign investment in Ukraine in five years. The plan is to carry out the project with Ukrainian companies, under the guidance of Canadian specialists. The idea is to develop the iron ore “Shimanovsky” deposit according to the most up-to-date international standards, including environmental assessments, impact studies, and so on.
The iron ore mine and facilities would take up 112 hectares of ground near the village of Rudnikove. Some of the land is now owned by the Ministry of Defence of Ukraine. The Canadian company Black Rock proposes to acquire a similar area of land for the Ukrainian military, and bring that new base up to NATO standards.
Black Iron is staking everything on its Ukraine investment. It touts the benefits of developing a project of this magnitude in Ukraine to a global audience of investors: a large deposit of high-grade iron ore; a strategic location in central Ukraine close to customers; favourable economics, such as the tax rate; and excellent infrastructure, consisting of skilled labour, available power, rail connections, and a port.
Free trade makes a difference. Dropping tariffs to zero tips the balance. Global investors are choosing to work through Canadian companies to do business in Ukraine rather than putting their money in other markets that have tariff walls. The Canada-Ukraine Free Trade Agreement is no longer a document signed by politicians. CUFTA is a blueprint for business and investment, and it’s already being followed to build productive enterprises in Ukraine.