VESCO, one of the world’s leading producers and exporters of white plastic clay, has acquired quarries in Spain, Poland, Romania, Serbia and Bosnia in addition to its Ukrainian assets to maintain its competitive position in the market, said Andriy Gorokhov, CEO of umgi, an investment company whose assets include VESCO.
“We have already made investments, in particular in the extraction of minerals that are in demand for ceramics production, in five countries: … Spain is the key one … and now we have added Poland, Romania, Serbia and Bosnia and are looking at Turkey,” he said at a recent Ukrainian-Swiss business forum held in Lugano.
Gorokhov reminded that the asset in Ukraine produces a product of unique quality, and before the war it was No. 2 in its niche and was valued at more than $700 million.
According to the umgi CEO, VESCO had a strategy to expand, in particular abroad, and UMGI helps the team with the strategy and its implementation.
Gorokhov explained that the war accelerated the process of entering foreign markets, as Ukrainian raw materials became more expensive due to logistics, so it became necessary to have raw material production facilities in other countries to maintain competitiveness and existing customers.
He clarified that in addition to quarries, VESCO has production facilities in two key locations: Port Ravenna in Italy and Port Castellon in Spain, where the team mixes raw materials and receives the final product, guaranteeing timely delivery to the client.
“Thus, as a company that has extensive experience, primarily in the field of investment in Ukraine, we are trying to combine business models in the right way, where Ukraine always has a place and there is something that could strengthen these business models through investment abroad,” said umgi’s CEO.
According to him, clay is just an example of this approach, and creating something bigger and more efficient benefits both customers and investors and increases the value of the asset.
In general, representing the investment company, which changed its name from UMG Investments to umgi in March this year, he noted that it has been in the mining business for 17 years, has invested more than $100 million in it and has achieved good results.
“The return rate is five to one for our investors. For the mining business, this is more than a good result, (which) proves that it is possible to make money in this area in Ukraine. You just have to know what you’re doing and be a professional player, which is the standard for the whole world,” Gorokhov emphasized.
According to him, mining assets are one of the three in umgi’s portfolio, but they are significant: before the war, their value exceeded $800 million.
“When the war broke out, we continued to look for projects, and now we have about 10 projects that we are considering in Ukraine, plus we have started developing additional projects in Europe,” Gorokhov added.
According to him, umgi is now offering European investors to invest in Ukraine on a partnership basis.
The head of the investment company noted that over 17 years of work in Ukraine, the situation with laws and regulations and market transparency has improved significantly, an investment map has been created, access to databases has been provided, and liberalization is underway, in particular, in 2023, with the adoption of legislation, access to the purchase of licenses was greatly facilitated. Gorokhov added that, for example, in Ukraine, obtaining a license is easier than in Romania or Poland, although it can take up to two years to prepare a field for operations.
At the same time, there are still issues with connecting to the energy and transportation infrastructure, Gorokhov admitted.
According to the website, VESCO Limited is a company that is a 100% owner of shares in the VESCO clay mining group.
VESCO is a portfolio company of umgi, which is part of Rinat Akhmetov’s SCM, the largest investment group in Ukraine.
VESCO’s Ukrainian assets include VESCO PrJSC, Druzhkovka Ore Mining, Vogneftebrud and Chasovoyarsk Refractory Plant.
According to the data on the site, the production capacity of VESCO exceeds 3 million tons of clay per year, the products are delivered to more than 25 countries, more than 60 types of products are made for the companies of ceramic and refractory industries. It is noted that more than 900 thousand tons of products are kept in warehouses to ensure stability of supply.
At the end of August 2022 VESCO announced that it had restored the delivery of products to Spain, Italy and Turkey. It was pointed out that after the start of full-scale war on the part of Russia, the group suspended the production for several months, evacuating people and some equipment, but the accumulated stocks were sufficient. At that time, the group had reached a shipment volume of 100,000 tons per month.
As umgi pointed out in March of this year, in addition to the brand, the corporate identity was also redesigned.
“Since its founding, umgi has transformed from a non-core asset management company that was part of an industrial conglomerate to a captive private equity firm with a diversified portfolio of assets located first only in Ukraine and now also in the EU and Turkey,” the release noted.
As of March this year, umgi has a track record of investing in start-ups and developing operating companies in the green economy, industrial services and natural resources sectors. Umgi’s assets are located in Ukraine, Spain, Romania, Poland, Italy and Turkey and were worth more than $1 billion as of January 1, 2022.
The National Energy Regulatory Agency (ANRE) of Moldova has decided to reduce the gas tariff for final consumers to 18.06 lei per 1 cubic meter (including VAT).
The National Agency has urgently examined the request of Moldovagaz company at a meeting on Wednesday.
As earlier reported, on June 5, Moldovagaz submitted a request for gas tariff decrease to ANRE. The company explained its request by the decrease in purchase prices of natural gas. The distributor asked to reduce the weighted average tariff by 36.8% – down to 16,492 thousand Moldovan lei per 1,000 cubic meters. It was proposed to reduce the final tariff for residential consumers, including VAT, by 31.9% – from MDL 29.27 to MDL 19.93 per 1 cubic meter.
Thus, the tariff was reduced by 38%.
The last time the gas prices in Moldova were reviewed in autumn 2022, the prices for households rose by 27.3% – from MDL 23 to MDL 29.27 per 1 cubic meter.
Natural gas tariffs in Moldova are set by ANRE upon request of suppliers.
The official exchange rate as of June 7 – 17.82 lei/$1.
The exit of trucks from Ukraine to Poland through the “Shehyni” border checkpoint is currently blocked, the State Border Guard Service of Ukraine said in its Telegram channel on Wednesday.
“In front of the checkpoint “Medika” Polish farmers blocked the movement of trucks traveling from Ukraine to Poland. Passage of cars, buses, as well as trucks to enter Ukraine is carried out as usual,” the statement said.
The Border Guard Service promised to report on the resumption of crossing operations, but in the meantime called on truckers to choose other ways to Poland.
PJSC Ukrnafta has a strategic goal to ensure Ukraine’s energy independence in oil products by 2027 by doubling its oil and gas production, the Verkhovna Rada’s Committee on Energy and Housing and Utilities said Tuesday, citing the company’s director Serhiy Koretsky.
“Our company’s plan is ambitious enough, but there is a reason to announce it. Ukrnafta has every opportunity to be on the list of Ukrainian companies stabilizing the work of Ukraine’s financial and economic system,” he said during a visiting meeting of the Rada energy committee on the prospects of the Ukrainian oil refining industry in western Ukraine on June 1.
According to Koretsky, by 2027 the PJSC plans to increase oil production from almost 1.5 to 3 million tons per year. The company will achieve such indicators by drilling new wells and intensifying production, restoring production at idle wells, as well as by introducing methods to improve oil recovery at existing fields.
As Koretskyy noted, Ukrnafta started implementation of the plan to drill 9 wells in 2023 and at least 30 wells in 2024. At that, the company has been drilling 1-2 wells a year on average in recent years. “Ukrnafta also did not participate in auctions for new licenses.
“Analysis of the external environment shows that in the medium term, the company’s products will remain in demand and Ukrnafta will have the potential to develop on key markets. We believe that very soon the company will be talked about as the best employer, universal supplier of oil products and highly profitable national enterprise,” summarized the head of PJSC.
“In 2023, Ukrnafta plans to increase its oil production by 5.8% (by 0.08 million tons) to 1.45 million tons compared to the previous year, and gas production by 0.3% (by 0.003 million cubic meters) to 1.04 billion cubic meters.
On November 5, 2022, the Supreme Commander in Chief decided to confiscate Ukrnafta shares (except for the controlling interest in Naftohaz Ukrainy) as state property during the martial law. Prior to the seizure, the structures of Ihor Kolomoyskyy and Hennadiy Boholyubov owned about 42% of Ukrnafta shares.
As of the end of March 2023, Ukrnafta had 89 fields with 3.7 thousand oil and gas wells. The company operates 451 gas stations.
Oil prices continue to fall on Wednesday morning amid expectations of record production in the U.S. this and next year.
The cost of August futures for Brent on London’s ICE Futures Exchange is $75.8 a barrel by 8:15 a.m., down $0.49 (0.64%) from the previous session’s closing price. The contract fell $0.42 (0.6%) to $76.29 a barrel on Tuesday.
July futures on WTI grew by $0.44 (0.61%) to $71.3 per barrel at NYMEX by that time. At the end of previous session the contracts fell by $0.41 (0.6%) to $71.74 per barrel.
The U.S. Energy Department raised expectations for domestic oil production (excluding other liquid hydrocarbons) in 2023 from 12.53 million bpd to 12.61 million bpd, the agency said in a monthly forecast.
The forecast is 720,000 bpd higher than the 2022 result of 11.89 million bpd. It is also 310,000 bpd better than the last average annual record for U.S. crude oil production set in 2019 at 12.3 million bpd.
The agency also raised its 2024 production forecast by 80,000 bpd to 12.77 million bpd.
In addition, the U.S. Energy Information Administration (EIA) will release its weekly report on oil, gasoline and distillate inventories on Wednesday at 5:30 p.m. Moscow time. According to the American Petroleum Institute (API), oil inventories for the week ended June 2 decreased by about 1.7 million barrels. The consensus forecast by Trading Economics suggests an increase of 1.5 million barrels.
The Swiss franc has gained about 4 percent against the U.S. dollar since late February, the best performance among G10 currencies.
Traders in recent weeks have started giving optimistic forecasts about the franc, which has not been seen since September 2021, Bloomberg noted. These changes are due to a projected divergence in monetary policy between the Swiss National Bank and central banks in Europe and China.
The sharp slowdown in economic growth in the euro zone and China strengthens analysts’ opinions that central banks will move to soften monetary policy. Experts also expect similar moves from the Federal Reserve in the not-too-distant future, although mixed economic data do not rule out the possibility of another prime rate hike before then.
“We expect the Swiss franc to rise in line with a multi-year trend,” said Thomas Fluri, head of currency research at UBS Wealth Management. He expects the currency to strengthen in the medium to long term because of the low price pressure in Switzerland and the fact that the country’s central bank is “convinced of the need to fight even this small inflation.” Moreover, “there are also many opportunities to repatriate money that was left outside the country during the period of negative interest rates,” the expert believes.
The franc also remains a safe haven for nervous investors amid worsening geopolitical tensions between the U.S. and China, the agency noted.
The Swiss national currency, like gold, shows good results in the periods when central banks’ monetary policy is stimulating. The franc appreciated 10% during the 2001-2002 cycle of rate cuts by the Fed and the ECB. At the beginning of the 2007-2008 financial crisis it gained 13%. When the Fed lowered rates in 2019-2020, the franc appreciated about 7%.
Long-term estimates of the franc “don’t look overstated at all” after accounting for differences in inflation with other countries, JPMorgan Chase analysts said. They predict a gradual strengthening of its exchange rate by March 2024 by more than 5% against the dollar and more than 4% against the euro.
After fears regarding the US debt ceiling are removed, the franc may weaken against the US national currency by 1-2%, experts say. However, they think this is only temporary negative factor that “is not a problem for our “bullish” strategic view of the franc.
The dollar is trading at 0.9067 francs and the euro at 0.9697 francs on Tuesday.
