The auction commission for the sale of PrJSC United Mining and Chemical Company with a starting price of UAH 3.7 billion has set a date for the privatization auction, which will take place on August 31, 2021, Head of the State Property Fund (SPF) Dmytro Sennychenko has said.
“Preliminary interest in the object was expressed by a wide circle of investors, part of whom is foreign. We hope for a high competition and a market price of the sale at a transparent auction,” he wrote on Facebook.
United Mining and Chemical Company state enterprise began its actual activity in August 2014, when the government of Ukraine decided to transfer to its management the property complexes of Vilnohirsk Mining and Metallurgical Plant (Dnipropetrovsk region) and Irshansk Mining and Processing Plant (Zhytomyr region). Then it was transformed into PJSC, and then – into PrJSC.
Vilnohirsk state mining and metallurgical combine (Dnipropetrovsk region) and Irshansk state mining and processing combine (Zhytomyr region), incorporated in PrJSC United Mining-Chemical Company, have claimed the absence of operational guidance by the head office, threatening a failure to comply with international obligations and large fines.
To normalize the situation in the company, the directors of the branches of Vilnohirsk combine and Irshansk combine sent letters to the president and prime minister of Ukraine, as well as to the SBU, the Ministry of Internal Affairs and the State Property Fund with a request to intervene the situation and stabilize the work of the branches and the company in general.
According to the letters, copies of which the Interfax-Ukraine agency saw, the branches and representative offices are separate divisions of the legal entity United Mining-Chemical Company and cannot independently conduct business activities. At the same time, a situation has now arisen when branches operate under conditions of limited authority and in the complete absence of managerial decisions on the part of the management of United Mining-Chemical Company.
The top managers of the branches are also concerned about the possible financial difficulties in their activities, stating that the management of United Mining-Chemical Company does not respond to letters from the branches regarding the provision of proper management of the financial and economic activities of the branches by the management of the parent company.
Due to the lack of funding for the activities of Vilnohirsk combine and Irshansk combine, there is a real threat of a complete shutdown of enterprises, the branches said in the letters.
The directors’ appeals provide data on the payment of taxes and it is noted that if the branch are halted, local budgets will not receive significant funds. In addition, failure to fulfill contracts for the supply of products will result in fines of approximately $15.541 million for Irshansk combine and $67.392 million for Vilnohirsk combine. At the same time, the total loss from halting Irshansk combine will be about UAH 800 million, and Vilnohirsk combine – UAH 1.2 billion.
Given this, both branch directors appealed to the country’s leadership, ministries and departments with a request to take urgent measures to ensure effective management of the company and divisions.
Private joint-stock company United Mining-Chemical Company, which the State Property Fund (SPF) of Ukraine jointly with the advisor BDO is preparing for privatization, is of the biggest interest among potential buyers, Head of the SPF Dmytro Sennychenko has said. “United Mining-Chemical Company is still the flagship of large-scale privatization: according to the advisor BDO, which is completing the preparation of marketing materials, 16-18 companies have already announced their intentions to take part in the competition,” he said in an interview with Interfax-Ukraine.
“Among them are two Ukrainian holdings, and the rest are well-known international companies: Japanese, Australian and others that will compete, having received information about the company, about reserves, about deposits,” Sennychenko said.
He explained this significant interest in the competition by the fact that titanium production has a value chain from final consumers to semi-finished products and titanium sponge manufacturers and ore mining companies.
“We will look at the profiles of these customers together with the relevant services and analyze them from the point of view of strategic security… We will carefully look at what holdings are there, what is the ownership structure,” the head of the SPF said. He called the publication about the alleged preparation of this facility for sale to buyers from Russia stove-piping.
Sennychenko recalled that the advisor and international professional companies, together with the SPF and the competition commission, will prepare draft conditions for potential buyers. However, the Cabinet of Ministers will finally approve these conditions.
Private joint-stock company United Mining-Chemical Company, managing Vilnohirsk Mining and Metallurgical Combine (Dnipropetrovsk region) and Irshansk Mining and Processing Combine (Zhytomyr region), invested large sums in the development of Vilnohirsk Mining and Metallurgical Combine in 2017-2018.
According to a press release of the company at the end of 2018, referring to acting Board Chairman Oleksandr Hladushko, starting from 2017, the company acquired 46 units of equipment for the Vilnohirsk combine – modern BELL dump trucks, which significantly supplemented the existing fleet, as well as JCB loaders, which will be used not only in the quarry, but also in repairs and loading finished products, a MAZ vehicle to move repair crews, cars, as well as the heavy trailer, which will allow to quickly carry bulldozers and other heavy equipment.
According to him, the company spent about UAH 300 million on these acquisitions, of which more than UAH 195 million were paid for the new BELL dump trucks.
In addition to acquiring new equipment, the company invested heavily in the repair of the existing one.
According to Deputy Chief Mechanic for transport, the head of the section for the repair of transport, Oleksiy Belousov, thanks to the gross restoration of dump trucks, the company has 21 operating BelAZ vehicles today. The company spent more than UAH 11 million on the restoration of old BelAZ vehicles.
The Vilnohirsk combine’s overburden complexes received significant investments – this year alone, more than UAH 50 million were spent on restoring their working capacity, Hladushko said.
In 2018, several significant upgrades were also made at the combine’s concentrator. This technological solution has significantly reduced grinding losses and increased extraction of the useful component to 99%.
Processing division upgraded its assets for the amount of over UAH 20 million.
In 2018, investments into the Vilnohirsk combine were sent to the renewal of assets, overhauls, and the commissioning of the stripping and mining equipment of the enterprise.
“With updating the fixed assets of the Vilnohirsk branch, we expected a certain result – to maintain a high level of efficiency and competitiveness of the enterprise, which will allow us to look confidently into the future,” Hladushko said.
According to him, in 2019, investments in the development of the main divisions of the plant, in particular the quarry, will continue.
INVESTS, MINING METALLURGICAL COMBINE, MINING-CHEMICAL COMPANY, VILNOHIRSK
Public joint-stock company United Mining-Chemical Company, managing Vilnohirsk Mining and Metallurgical Combine (Dnipropetrovsk region) and Irshansk Mining and Processing Combine (Zhytomyr region), in four years after its creation has sent over UAH 1 billion in technical re-equipment and upgrade of assets, and its charter capital grew to UAH 3 billion in 2018 from UAH 1.9 billion in 2017. Acting Board Chairman Oleksandr Hladushko said in an interview posted on the company’s corporate website that on August 12, the company will celebrate the fourth anniversary.
“Our branches were returned from the lease to the management of United Mining-Chemical Company in September 2014. And the main task that the government put at that time was to increase the payments to the national budget, which is impossible without seeing profit… We successfully coped with this task: if in 2014 the state received taxes and mandatory payments from the company at the level of UAH 16.9 million, then in 2017 it was UAH 875.7 million,” Hladushko said. At the same time, he recalled that in 2017, the company paid dividends to the state in the amount of UAH 321.8 million, this year – almost UAH 333 million.
The head of the company pointed to the technical readiness of the branches to independently perform production tasks: “If immediately after the lease, the availability of special equipment did not exceed 50%, then in 2018 it grew almost twice thanks to investments and reached 90%, especially at Vilnohirsk Mining and Metallurgical Combine.
