Since the beginning of the year, Ukrainian society has been unsettled by cases involving the sale of special permits for subsoil use in areas such as Makove Swamp, the Stara Vyzhivka Nature Reserve, and near the Busha Historical and Cultural Reserve.
These are three significant sites, each with its own unique characteristics. The first is a swampy, virgin forest, a locally important nature reserve area, which has been entirely sold off for peat extraction. The second is a sand dune, a popular recreational spot for locals, and a pine forest that is now threatened with destruction due to sand mining. The third is a plot of land on a steppe slope in a historic location, sold for limestone extraction.
What unites these cases is public outrage and the potential environmental risks posed by these projects. All three types of minerals are to be extracted via open-pit mining, meaning the creation of quarries that will result in the complete destruction of everything above the mineral deposits.
The root cause of such conflicts between public interests and those of mining companies is thoughtless deregulation, which fails to account for the environmental rights of communities or the need to protect natural habitats.
Officials argue that all special permits for subsoil use are granted through transparent auctions, and that subsequent mining plans undergo an Environmental Impact Assessment (EIA) process. On the surface, this seems transparent, fair, and environmentally sound.
However, there are numerous complications and underlying issues. Let’s examine them more closely.
Restrictions on the Functions of the Ministry of Environment within the Framework of Deregulation
The first question is: who determines which sites are put up for auction? Surprisingly, it is not the state, as one might initially assume.
On the website of the State Service of Geology and Subsoil of Ukraine (Ukrainian Geological Survey), there is a list of applications for sites to be auctioned. In fact, it is businesses that choose a subsoil plot they wish to develop and submit the necessary documents. Officials from the State Service of Geology and Subsoil are then obliged to put the site up for auction, provided the business has submitted a complete set of documents.
From there, two scenarios can unfold. The first scenario occurs when there is no geological exploration data available for the site. In this case, geological exploration must be carried out prior to any production, and a special permit for this (sometimes immediately followed by production, known as “pilot development”) must be approved by the Ministry of Environment. Although there is no formal approval procedure, ministry officials typically request the opinion of the regional state administration in writing.
Subsequently, based on all the available information, the decision is made by a working group on subsoil use, which includes not only ministry officials but also representatives from the State Forestry Agency and the State Water Agency. The results of this review are published on the Ministry’s website in a dedicated section.
In the past nine months, the Ministry has generally taken a pro-environmental stance. For example, a few months ago, they refused to allow amber mining at the Skhidna-2 site due to its proximity to the Rivne Reserve and the inevitable negative impact on its protected natural ecosystems. There have also been numerous refusals where mining was planned in forested areas.
Consequences of amber mining in the forest
So where did the cases of Busha and Makove Swamp come from? The answer is simple: extraction is planned in areas where geological exploration has already been conducted. As part of deregulation, following the adoption of Cabinet of Ministers Resolution No. 749 on 4 July 2023, the requirement to coordinate the sale of permits for such subsoil areas with the Ministry of Environment was removed.
In these cases, the State Service of Geology and Subsoil can auction the site directly, as it did in the aforementioned instances.
When an Environmental Impact Assessment (EIA) is not Enough
You might ask, ‘But isn’t there an EIA procedure?’ Yes, there is. However, here’s the issue: after the auction is concluded, the winner pays the money to the local budget, and only then an EIA is carried out. For subsoil extraction projects, the EIA is issued by regional state administrations, which are typically keen to welcome any form of investment. Even when the decision rests with the Ministry of Environment, it still faces a difficult position. On the one hand, its subordinate body held the auction and collected revenue for the state, but on the other hand, it must ensure compliance with environmental legislation. Extracting peat or sand in a nature reserve clearly contradicts this.
As a result, in most cases, a permit for extraction is granted following the EIA. This was the case with Volynpryrodresurs communal enterprise, which, although only after three attempts and not for all areas, received four positive conclusions for peat extraction in the Volyn region, including in well-preserved mires. Furthermore, the imposition of mandatory “environmental conditions” as part of the EIA process—such as “extraction must be carried out without altering the hydrological regime”—seems like an attempt to appease both business interests (by issuing the permit) and the outraged public (by setting conditions, despite them being impossible to fulfil when extracting peat).
Here is what typical peat extraction looks like. The photo shows the Velyke Bahno field in the Volyn region, which is operated by Volynpryrodresurs
Fortunately, due to public outcry regarding the sale of subsoil in Makove Swamp and the Stara Vyzhivka Nature Reserve, the prosecutor’s office began challenging the auction results. In August 2024, it successfully persuaded the commercial court to overturn the decision of the State Service of Geology and Subsoil to sell a special permit for subsoil use within the virgin forest natural monument Makove Swamp. The court case concerning the Stara Vyzhivka Nature Reserve is still ongoing.
However, the ideal outcome for all involved would be for such special permits not to be sold at all, preventing unnecessary conflicts and saving the environmental prosecutor’s office from using its limited resources.
What Can Be Done?
A more complex but systemic solution would be to adopt the Cabinet of Ministers’ Resolution to require the State Service of Geology and Subsoil to conduct an Environmental Impact Assessment (EIA) before putting subsoil sites up for auction. If the EIA produces a positive conclusion, the auction for that particular site can proceed; if it results in a negative outcome (i.e. the environmental impact is deemed unacceptable), the site would be removed from the list of subsoil areas available for development.
A simpler option would be to reintroduce the requirement for ministerial approval for all subsoil sites planned for auction. Additionally, a procedure could be introduced whereby the Ministry of Environment publicly shares the coordinates of the sites under consideration, allowing the public to submit comments highlighting issues that officials may not be aware of or have overlooked. At the same time, it would be necessary to introduce the possibility of refunding the auction winner’s payment if it becomes impossible to obtain a positive EIA conclusion due to conflicts with environmental legislation.
The Ministry of Environment promised to implement one of these options back in April, but the relevant draft documents have yet to be made public. However, the State Service of Geology and Subsoil has decided to simply… capitalise on the situation! The State Information Geological Fund of Ukraine, a state enterprise and a subordinate body of this agency, now offers a paid service: “Pre-project monitoring of a subsoil site proposed for obtaining a special permit for subsoil use through an electronic auction.”
In other words, they will, for a fee, analyse whether extraction at the auctioned site complies with legal requirements.
From an environmental standpoint, given the vital role of carbon-rich natural ecosystems such as swamps, forests, or steppes, it would be wise to legally limit certain types of subsoil use in these areas. Priority should be given to restricting the extraction of widespread minerals such as amber, sand, clay, etc.
As for peat, considering the severely negative impact its extraction has on climate and biodiversity, its extraction should only be permitted within the confines of already sold special permits, with the added obligation of renaturalisation (restoration of the wetland ecosystems) at the expense of the subsoil user. In essence, peat extraction should only be allowed in degraded areas that require reclamation in any case. Moreover, the government was supposed to develop a regulation on the use of peatlands in 2021. Until this is done, a moratorium on the sale of new peat extraction sites would be a sensible measure.
An example of a bog threatened by peat extraction. From a climate perspective, such ecosystems must be preserved, and no mining should be permitted within their boundaries
Petro Tiestov, an expert on environmental legislation at the Ukrainian Nature Conservation Group Public Organization
The material was prepared within the framework of the “Econet 2” project, supported by Bread for the World through Austausch e.V.
