Opportunities Amidst Challenges

Logistics: Ukraine’s Transcontinental Potential

Ukraine’s strategic location as a transit corridor between Europe, the Middle East, and Asia continues to present opportunities in the logistics sector. The country has an extensive rail network, key highways, ports, and airports that facilitate trade between these regions.

Investing in the modernisation and expansion of Ukraine’s transportation infrastructure is a key opportunity for investors. The country’s infrastructure needs to be expanded and improved to meet European standards. Private investment and public-private partnerships can play a crucial role in achieving this goal.

One notable example is the partnership between the U.S. Agency for International Development (USAID) and the Ukrainian agricultural operator Grain Alliance, along with Ukrainian agricultural companies Kernel and Nibulon. This collaboration aims to address the logistical challenges created by the war, with a combined investment of over US $44 million to support the expansion of storage and infrastructure in Ukraine’s agricultural sector. These investments are expected to significantly increase Ukraine’s grain shipping capacity and open new opportunities for trade and exports.

Construction Materials: Rebuilding Ukraine’s Infrastructure

The need for extensive reconstruction and repair creates opportunities in the manufacturing of construction materials. Several companies have already committed significant investments in the millions of dollars or euros.

ArcelorMittal, a major foreign investor in Ukraine’s steel sector, continues to invest in its facilities despite the difficult operating conditions. The company has invested US $120 million in 2022 and plans to invest another US $130 million in 2023. The construction of the “Tretia Karta” tailings storage facility, a US $150 million project, is evidence of ArcelorMittal’s commitment to Ukraine.

The Kingspan Group, an Irish company specialising in high-tech, energy-efficient building materials, plans to invest more than US $280 million in the construction of a construction technology campus in the Lviv region. The project aims to produce high value-added construction products and promote green production with a low carbon footprint. Fixit, a German company, is also investing in Ukraine’s construction materials industry by building a second plant in Lviv. This investment will help meet demand for building materials and contribute to the restoration of Ukraine’s infrastructure. Additionally, companies like Amsted Rail from the United States are exploring opportunities to launch production facilities in Ukraine, focusing on the production of bearings and components for railcars.

Agri-Processing: Ukraine’s Agricultural Potential

Ukraine’s agricultural sector is a major contributor to its economy, accounting for nearly 20% of GDP and employing 20% of the workforce. With one-third of the world’s black soil, Ukraine has fertile land that supports a thriving agricultural industry. The country offers competitive advantages such as attractive land prices, competitive wages, and robust logistics.

UkraineInvest, an arm of the Ukrainian government tasked with promoting investment opportunities, believes that additional investment in farming techniques, irrigation, logistics, training and value-added production could double Ukraine’s food exports. Efforts are already underway, with partnerships such as the one between USAID and Bayer, which is investing US $15.5 million in Ukraine’s agricultural sector through new technologies, high-quality seeds, and farmer safety campaigns.

Major players in Ukraine’s agri-food industry, including Coca-Cola, PepsiCo, Mondelez and DuPont, have recognized the country’s potential and made significant investments. Nestlé has started construction of a new plant in Volyn with an investment of over US $6 million. Carlsberg Ukraine has invested UAH 1.5 billion in the opening of a new production line at the Kyiv Brewery. The American tobacco company Philip Morris will invest more than US $30 million to open a new production facility in the Lviv region. These investments demonstrate the confidence of international companies in the potential of Ukrainian industry.