How Tabalov’s UkrLithiumMining received permission to use largest lithium deposit without tender
One of the largest lithium deposits in Ukraine in terms of reserves, the Polokhivske lithium deposit in the Kirovohrad region, is still owned by UkrLithiumMining, which has not started work on the deposit for years. In addition, it seems clear that the process of granting the company a special mining permit was conducted without a tender and in violation of the law. More on this below.
As is well known, the ultimate owner of UkrLithiumMining LLC is Serhii Tabalov. His father, Oleksandr Tabalov, a former member of parliament from the Batkivshchyna party, was one of the first "party-switchers" in the parliament under Viktor Yanukovych's presidency in 2012: immediately after being elected to the Verkhovna Rada from the Batkivshchyna party, he refused to join the faction.
The media reported that Tabalov's business partner in the early 2010s was Vitalii Khomutynnik, a former regional official who owned Ukrnaftoburinnya together with Ihor Kolomoiskyi, Hennadii Boholiubov and Pavlo Fuks.
What's wrong with granting a special permit?
In early 2017, the State Service of Geology and Mineral Resources of Ukraine issued an order granting UkrLithiumMining LLC a special permit to mine lithium ores at the Polokhivske deposit in Kirovograd region. It is worth noting that its reserves are estimated to be among the largest in Ukraine. The State Service of Geology and Mineral Resources also granted the special permit without tender, citing independent exploration of the deposit at its own expense and appropriate testing of the company's reserves.
In the protocol of the State Commission of Ukraine for Mineral Reserves (SCUMR), we can see that UkrLithiumMining LLC received only a decision to approve the reserves. However, the State Service of Geology and Mineral Resources did not approve the reserves of the Polokhivske deposit. Thus, UkrLithiumMining LLC received a special permit for lithium mining without holding a tender in violation of the law, as it failed to pass both stages of the reserves review.
Also, at the time of submission of the geological and economic assessment materials for the Polokhivske deposit to the SCUMR, UkrLithiumMining did not have a special permit for subsoil use and did not have the legal status of a subsoil user.
Thus, since UkrLithiumMining was not a subsoil user, it had no right to submit geological and economic assessment materials to the SCUMR. And the SCUMR, accordingly, should have returned them to the customer. However, the State Commission, contrary to the provisions of the law, took the documents for consideration and issued a protocol based on them.
In addition, the State Service of Geology and Mineral Resources did not have the authority to issue a special permit for the extraction of lithium ores without tender, as at the time of issuing the special permit to UkrLithiumMining LLC, this contradicted the Cabinet of Ministers Resolution No. 615 of 30.05.2011, which states that the issuance of permits without tender applies exclusively to oil and gas subsoil riches, not lithium ores.
Courts leave UkrLithiumMining with the largest lithium deposit
In 2018, the Kyiv Prosecutor's Office filed a lawsuit with the administrative court demanding to cancel the order of the State Service of Geology and Mineral Resources to issue UkrLithiumMining a special permit for the extraction of lithium ores at the Polokhivske deposit. However, on December 10, 2018, the District Administrative Court dismissed the prosecutor's claim, and on March 19, 2019, the Court of Appeal upheld the decision. At the same time, no cassation appeals were filed.
The fact that the prosecutor's office chose incorrect factual and regulatory grounds to substantiate its claim led to the solution of the case, not in favor of the state. Thus, the subsoil, which is the exclusive property of the people of Ukraine, is now in the use of UkrLithiumMining.
Two years of "silence" at the field
However, it is worth noting that there are currently grounds for the prosecutor's office to file a new lawsuit.
On March 25, 2021, the Presidential Decree enacted the decision of the National Security and Defense Council, which recommended unscheduled inspections of subsoil users who received a special permit without tender. And the State Service of Geology and Mineral Resources, by its act of November 24, 2021, found a violation by UkrLithiumMining, which did not start work at the field within two years of obtaining the permit.
Thus, this, as well as the introduction of martial law on February 24, 2022, may serve as grounds for filing a new lawsuit to protect the rights of the state and people of Ukraine. Time will tell whether the former Tabalovs "party-switchers" will lose control of the field. At the same time, it will be a good demonstration of whether the judicial system is ready for change.
Vasyl Prokopenko
