Million-dollar investments despite the protracted war: which industries are most attractive for foreign business in Ukraine

What companies have continued to invest in Ukraine over the past year and have any new investors emerged?

Foreign investment in Ukraine increased by 40% in 2023 and reached $1.2 billion. These are the estimates of the KSE Institute. Among the major investors are giants of steel industry, energy, construction materials, and others. Last summer, we analyzed which global companies have invested the most in Ukraine since the start of the full-scale war. GMK found out whether the Ukrainian economy has retained major foreign investors and whether new ones have appeared.

Steel sector

This sector remains among the leaders in terms of investment, thanks in part to the metals giant ArcelorMittal. Despite its proximity to the frontline, water supply and energy access disruptions, the company continued to develop its production in Kryvyi Rih. In 2024, ArcelorMittal Kryvyi Rih intends to increase its capital investments by almost 20% – to $155 million.

A large-scale project is underway – the construction of the Third Map tailing dump (a complex of facilities for the disposal of industrial waste), which cost the company $150 million. ArcelorMittal has recently received approval for the construction of this tailings facility from the Ministry of Environmental Protection and Natural Resources of Ukraine. The project is expected to be completed by the end of 2024.

The mining industry is also expecting large-scale investments. As it became known earlier this year, the Australian public company European Lithium became the owner of 100% of the capital of European Lithium Ukraine LLC. The company became interested in lithium mining in Ukraine at the end of 2021. It planned to mine lithium in Donetsk and Kirovohrad regions. Currently, plans are underway for the Dobra site (Kirovohrad region), which could become the largest lithium deposit in Europe. The company plans to invest $1 billion in its development over 4-5 years, but the right to do so is currently being challenged in courts.

In an interview with Ukrainian journalists, European Lithium CEO Tony Seid said that his company is also ready to build two plants in Ukraine in the future: an enrichment plant next to the mine, which should increase the share of lithium oxide in the ore from 1.36% to 6%, and a plant for the production of lithium hydroxide, which is used to make batteries. However, electricity is of great importance for this production.

In addition, the Canadian company Black Iron Inc. which is engaged in iron ore mining at the Shymanovske deposit in Kryvyi Rih, has been waiting and urging the Ukrainian government to sign an investment agreement since last summer, which will provide for investments of $1.1 billion in a mining and processing plant in Ukraine.

Building materials industry

Given the scale of the post-war recovery required, the construction materials industry is becoming one of the most attractive industries for investors and is also taking on leadership positions.

For example, the Irish CRH, a leading global manufacturer of building materials (in Ukraine, it operates under the Cemark brand), continues to develop its business in Ukraine. The company owns three plants: in Kamianets-Podilskyi, Odesa, and Mykolaiv. The company invested €80 million in its production during the full-scale invasion. The investments were directed to a logistics terminal in Kyiv region ($34 million) and the development of logistics, as well as to improving the energy efficiency of enterprises. For example, Podilsky Cement, according to CRH management, has one of the lowest energy consumption levels in Europe.

According to Guillaume Cavalier, President of CRH Central and Eastern Europe, in a recent interview, the company’s financiers always weigh all risks very carefully and thoroughly.

«In our opinion, the prospects in Ukraine outweigh the risks. Cement is critical for the reconstruction. So, of course, this is a promising investment,» he emphasized.

Since the fall of 2023, CRH has been trying to finalize the acquisition of Volyn Cement and Pivden Cement for €100 million. But the deal has been pending approval from the Antimonopoly Committee for more than six months.

In addition, ArcelorMittal Construction, the construction division of ArcelorMittal, plans to set up a modern production facility in Kyiv region that will specialize in the production of modern profiles and insulation panels using environmentally friendly recycled and renewable XCarb steel.

In the coming years, ArcelorMittal plans to invest €40 million in the new facility and create 100 jobs in Kyiv region.

Another investor in the industry, the German company MC-Bauchemie, is already planning to expand its dry construction mixes production in Berezan (Kyiv region), said Artem Pryimachenko, director of MC-Bauchemie Ukraine.

According to him, the company intends to build a new line for special construction materials, such as polymer-cement mixtures for structural concrete repair, toppings for industrial floors, waterproofing materials, and highly functional tile adhesives. The estimated investment is €1.5 million. The new line in Berezan could be launched in late 2025.

Engineering

Machine building is another industry where investments are currently focused on the new needs of our country caused by the full-scale invasion. For example, IPR Aqua, a subsidiary of Dekonta, an international environmental company headquartered in the Czech Republic, is going to produce mobile water treatment plants in Lviv (Stryi). Dekonta a.s. operates in the environmental sector, including wastewater and air treatment, pollution research, waste management, environmental development, etc. Since the beginning of the full-scale invasion, the company has been actively helping Ukraine with both equipment supplies and the development of environmental solutions, and now it will set up production on the ground.

As for the American company Amsted Rail, which in the fall of 2022 negotiated the launch of the production of bearings and components for railcars in Lviv, there is no information on the progress of this project.

Energy

In light of the destruction of shunting generation, efficient energy solutions, including those using renewable sources, are once again gaining relevance for Ukraine. And some foreign companies are ready to support our energy recovery.

Madoqua Renewables Holding Limited, a Dutch green energy company, has agreed with the Investment Promotion Office (Ukraine Invest) to build a waste recycling plant in Ternopil. The project is worth €900 million.

The new plant will produce methanol, an environmentally friendly fuel, from sugar (molasses) waste using wastewater.

Turkey’s Onur Group remains a major investor in the Ukrainian energy sector. By 2030, the group plans to invest about $260 million in Ukrainian green energy, in particular in wind farms in Lviv and Zakarpattia with a total capacity of 200 MW. As of September 2023, Onur has already invested about $290 million in this area – in a 150 MW solar power plant in Khmelnytsky region.

Chemical Industry

In March 2024, the international company Unilever began construction of a new plant in Bila Tserkva, Kyiv region. The plant will cost €20 million and create almost 100 new jobs. It will produce personal care products, shampoos and shower gels. The products will be focused primarily on the Ukrainian market. Construction is scheduled to be completed by the end of 2024.

The company emphasized that the production facility is being built in accordance with the standards of a green and sustainable industrial ecosystem with efficient use of water and energy resources, comfortable working conditions and minimal environmental impact.

Food Industry

The Danish brewing group Carlsberg continues to invest in production in Ukraine. According to Carlsberg Group CEO Jakob Aarup-Andersen, following a meeting with Ukrainian President Volodymyr Zelenskyy, his company plans to invest UAH 2 billion in Ukrainian business in 2023-2024. In particular, last year they launched a new production line at the Kyiv Brewery. According to the report, this line features modern technologies, full automation, compliance with the safety requirements of the staff and the safety of the product produced on it.

By the way, in mid-May, the American tobacco company Philip Morris opened a new factory in Lviv region, investing $30 million in it. The first line is already in operation and the second is almost ready. A total of five lines will be installed.

This is not a complete list of companies that have made or announced future investments over the past year. Although there are some newcomers on our list, the majority of investments in modernization and production scale are made by companies that have been operating in the Ukrainian market long before the full-scale invasion. Some of them decide to invest in production for practical reasons, such as difficulties in paying dividends to their parent companies. Some are working for the future, expecting to reap significant benefits after Ukraine joins the EU. For some, investing in the Ukrainian economy is a gesture of solidarity with the Ukrainian people suffering from the war.

But regardless of the motivation, these investments are needed to restore our economy. Ukraine’s GDP fell by almost a third in 2022 and grew by only 5.3% in 2023. Until we reach pre-war production levels, we will have to rely on grant or loan support from our partners, which in turn cannot be unlimited.

The EU and our other partners are well aware of this, so they do their best to help companies that are considering developing production in Ukraine. On April 17, the Ukraine Investment Framework (UIF) was launched as part of the Ukraine Facility program, which aims to help attract primarily private investment in the Ukrainian economy.

The UIF provides for several mechanisms. First, it provides guarantees worth €7.8 billion. These guarantees should partially cover the risks (including security) of implementing large-scale investment projects. Secondly, the provision of grants, mixed financing, and technical assistance worth €1.5 billion. The Ministry of Economy expects to attract up to €40 billion in investment in this way.

In addition, the World Bank’s multilateral investment guarantee agency MIGA and national export credit agencies of individual countries also provide risk insurance for investments in Ukraine.

At the same time, Ukrainian government authorities have become an obstacle to investment for some companies. Delays in signing agreements, issuing permits, and resolving court disputes all take away from Ukraine’s investment attractiveness in the eyes of investors and deprive our economy of much-needed millions of foreign currency.

Economic recovery cannot be a one-off effort, but must become a joint task for government officials at all levels.