Group DF, which consolidates the assets of Ukrainian businessman Dmitry Firtash, including nitrogen chemicals companies of Ostchem holding, has signed a memorandum with Korean construction company Hyundai Engineering Co., Ltd on cooperation in Ukrainian projects in the construction and reconstruction of chemical plants for the production of fertilizers.
According to the holding’s release, cited by Interfax-Ukraine, the document provides for the creation of joint investment projects in the fertilizer industry both in Ukraine and in other jurisdictions. It is about the construction of new and reconstruction of existing chemical plants of Group DF. It is emphasized that the parties will cooperate in good faith and make all necessary efforts to achieve the common goal of rebuilding Ukraine.
“Group DF is developing a strategy to restore the chemical industry in post-war Ukraine and plans to meet the pent-up demand from the Ukrainian agricultural sector. With the support and cooperation of Hyundai Engineering Co, we will contribute to the revival of Ukraine’s economy and strengthen the chemical industry. The Group is also considering all kinds of cooperation with Hyundai Engineering Co. in projects to restore and expand its logistics infrastructure,” said Robert Shetler-Jones, CEO of Group DF International GmbH.
“The company is ready to consider options for participating in the post-war recovery of Ukraine’s chemical industry. We sincerely believe in the prospects of infrastructure restoration, reconstruction and construction of gas processing plants,” said Lim Seung Jae, Senior Vice President of Hyundai Engineering Co., Ltd.
Hyundai Engineering Co, Ltd is a Korean multinational contractor for the engineering, procurement and construction of oil and gas processing plants, including fertilizer and chemical plants.
Group DF consolidates Dmitry Firtash’s assets in the gas distribution, chemical, titanium and port industries, as well as in agriculture and media.
Ostchem is Group DF’s nitrogen holding company that unites the largest mineral fertilizer producers in Ukraine. It includes Rivne Azot, Cherkasy Azot, as well as Sievierodonetsk Azot and Stirol, which are not operating and are located in the occupied territories.
The current surplus of nitrogen fertilizers in the Ukrainian market reaches about 200,000 tons, which indicates that the Ukrainian agro-industrial complex is fully supplied with them for the spring sowing campaign, Oleg Arestarkhov, head of corporate communications at Group DF, said in a comment to the Interfax-Ukraine agency.
“The issue with nitrogen fertilizers for Ukraine is completely closed. According to our estimates, as of March 30, their current surplus reaches about 200 thousand tons. There are significant reserves of fertilizers, and Ostchem continues to process all solvent requests from farmers and ship products without any problems,” Arestarkhov emphasized. .
According to him, the company closes the current demand for nitrogen fertilizers within the country.
“The only thing is that in some regions there are logistical problems with delivery due to hostilities,” said a representative of Group DF.
At the same time, he noted that supply chains are constantly being restored. “We are doing everything possible to completely update the logistics. Ukrzaliznytsia is helping us a lot, our logistics company (Nika Trans Logistics, part of Group DF – IF) is working, which delivers fertilizers, our Ukragro NPK warehouses are working,” he said. Arestarkhov.
He added that domestic Ukrainian consumers were and remain a priority, 95% of all fertilizers produced by Ostchem are shipped to the domestic market.
Commenting on the issue of exports, Arestarkhov noted that the government’s permission to export fertilizers in the amount of 70,000 tons per month will in no way affect the security of Ukrainian farmers on the part of the Ostchem holding. The head of corporate communications said that the export of fertilizers by the Black Sea is now impossible due to risks. “Road and rail transport will be the main ones, it is safer, although more expensive,” he said.
According to him, all Ukrainian companies, who wanted to, have already bought fertilizers. “We have not refused anyone. And now we are not refusing anyone. The strongest demand is for saltpeter and UAN. The volumes that we promised to ship to end consumers and contracted, we have shipped and are shipping. You see, now is a very responsible period for the country, and we are clearly aware that this is not just the fulfillment of the agreements concluded by Ostchem, this is a matter of Ukraine’s national food security,” summed up the representative of Group DF.
According to his estimates, the price of nitrogen fertilizers will not fall in the near future. “I don’t think there will be a fall in the near future, it’s unlikely. Rather, on the contrary. Although the winter period is over, the price of gas, which is the main raw material for the production of nitrogen fertilizers, for obvious reasons, remains too high at European hubs. Many factories in the world are stopped, and fertilizer producers that are working will not trade fertilizers at a loss, at a price below cost,” he explained.
Arestarkhov added that the balance between supply and demand is seriously disturbed in the world ammonia markets, and the problems affect not only nitrogen fertilizers, but also potash fertilizers, which are complex.
“The new price levels are something that many farmers are already accustomed to. It hurts businesses. Margins are falling for both fertilizer and agricultural producers. It will take time for global fertilizer markets to get out of the turbulence zone and return to a state of stability, balance and predictability Only peace and the solution of all geopolitical issues can stabilize the markets. Everything else is derivative,” the representative of Group DF emphasized.
Group DF is consolidating the assets of businessman Dmitry Firtash in the gas distribution, chemical, titanium and port industries, as well as in agriculture and media.
The nitrogen sub-holding of Ostchem includes Cherkasy Azot, Rivneazot, Severodonetsk Azot Association, as well as Stirol in the occupied Gorlovka (Donetsk region).
Valki-Ilmenite and Mezhdurechensk Mining and Concentration Complexes, part of the titanium business of Group DF, in January-March this year, according to preliminary data, reduced the production of ilmenite concentrate (titanium dioxide concentrate) by 11.9% in compared to the same period last year, to 31,000 tonnes from 35,200 tonnes.
According to the group’s press release on Monday, Group DF analysts expect a recovery in demand for titanium products in global markets only from mid-2022, so complexes will increase production according to demand.
Chairman of the boards of Valki-Ilmenite LLC and Mezhdurechensk LLC Serhiy Kosenko, who is cited by the press service, said that the production plans are fully fulfilled and all deliveries of products are carried out in accordance with the concluded contracts.
“The reduction in production was due to a change in the market situation – a global decrease in demand for titanium products. This was not a reason to curtail the large-scale investment program launched at the plants. In 2021, the shareholder has already invested more than UAH 31 million in two mining and processing complexes. We continue the planned renewal of fixed assets: new mining and transport equipment is being purchased, modernization, repairs and renewals of old assets are being carried out. Our strategy is aimed at increasing production efficiency, improving cost indicators and increasing the margin of the business as a whole,” the press service said, citing Kosenko.
Kosenko noted that analysts of the company expect a recovery in demand for titanium products at pre-crisis levels only from mid-2022.
“This is an optimistic scenario. Now, when the global market is undergoing a significant shrinkage, our task is to prepare for future growth. Therefore, we are actively updating our equipment and began conducting mining preparatory work to move to new production areas,” the top manager said.
The press release also said that as part of Group DF’s titanium business development strategy, the shareholder continues to invest in the construction of two more new plants: Stremyhorod (Zhytomyr region) and Motronivsky (Dnipropetrovsk region) Mining and Concentration Complexes.
About $150 million have already been invested in the Motronivsky plant project. The planned design capacity of the enterprise is estimated at 120,000 tonnes of ilmenite concentrate, 14,000 tonnes of zirconium and 20,000 tonnes of rutile concentrate.
Investments in the Stremyhorod plant project exceeded UAH 100 million. At the moment, design and survey work is being carried out. After the implementation of the first phase, the design capacity of the plant will be about 500,000 tonnes annually of ilmenite concentrate and 150,000-200,000 tonnes annually of apatite concentrate.
Group DF combines the assets of Dmytro Firtash. The core areas of the group are fertilizer and titanium businesses, gas distribution and banking.
The distribution chain UkrAgro NPK and Nika-Tera sea terminal (Mykolaiv), both are parts of Group DF, have jointly opened the first agricultural supermarket – a wholesale and retail warehouse store of agricultural products in the territory of the port.
Group DF said in a press release on Friday, July 31, that the outlet is fully equipped for reception, storage, packing and shipment of goods. Its targeted audience includes customers of the port and farmers from Mykolaiv and Odesa regions.
“At the beginning, the assortment of products includes various types of nitrogenous and mixed fertilizers that fit various types of package. We plan to gradually extend the assortment by seeds, plant protection agents, and other chemicals. In future we will sell other goods and services that are necessary for farmers, agricultural producers, traders,” Director General of UkrAgro NPK Volodymyr Dovbnia said.
The new outlet de jure is an official representative office of PJSC UkrAgro NPK.
UkrAgro NPK is a large chain of warehouses selling mineral fertilizers in Ukraine. It has been a part of Group DF since 2012.
