JSC Malynskyi Stone Crushing Plant, PJSC Pinyazevytskyi Quarry, and JSC Korosten Quarry have been allowed to return to granite mining.
According to NADRA.INFO, on Tuesday, 27.08.2024, the relevant order of the First Deputy Head of the State Service of Geology and Subsoil of Ukraine Volodymyr Buchko was published on the official website of the Service (download the order, appendix).
The renewal of the special permits became possible after a corrective decision of the National Security and Defense Council of Ukraine, which removed the use rights granted to the above-mentioned companies from the sanctions imposed on the owners of the companies, Olena Kalpa and Ihor Naumets. It is worth noting that this decision of the National Security and Defense Council also prohibits the payment of dividends or other payments on corporate rights in favor of the sanctioned owners or their representatives.
As a reminder, in 2023-2024. the State Service of Geology and Subsoil of Ukraine suspended a number of mining and prospecting special permits for the use of subsoil to Ukrainian companies on the grounds that the business owners had previously been sanctioned by the National Security and Defense Council. See the overview of the consequences here.
The Office of the President of Ukraine promised to organize the development of amendments to the legislation to unblock Ukrainian extractive companies. The European Business Association proposed to revise the sanctions policy in the field of subsoil use.
NADRA.INFO addressed the First Vice Prime Minister of Ukraine and Minister of Economy of Ukraine Yulia Svyrydenko and the Head of the Security Service of Ukraine Vasyl Malyuk with an open appeal to adjust the sanctions mechanism to restore the activities of Ukrainian extractive companies. The SBU considered the appeal and took it into account.
The Ministry of Economy of Ukraine also supported the need to resolve the situation with special permits for subsoil use suspended due to the NSDC’s imposition of personal sanctions on the ultimate beneficial owners of subsoil users.
Eventually, on June 24, 2024, the NSDC amended the previous sanctions decisions against Vadym Novynskyi and Vadym Yermolaiev and imposed 10-year sanctions on Dmytro Firtash (the so-called first corrective decision of the NSDC). After that, the State Service of Geology and Subsoil renewed nine special permits. The NSDC’s corrective decision also provided for the revocation of a number of special permits, but as of August, the State Service of Geology and Subsoil had terminated the subsoil use rights of only Vadym Novynskyi’s companies (one of the sites had already been included in the strategic list). Motronivsky GOK and Trends System avoided revocation amid the ongoing procedure of alienation of special permits and court injunctions (for more details, see here, here, here, here).
PrJSC United Mining and Chemical Company (UMCC), which has taken over management of Vilnohirsk Mining and Metallurgical Plant (VGMK, Dnipro region) and Irshansk Mining and Processing Plant (IGOK, Zhytomyr region), has resumed mining titanium raw materials and the full operation of the open pits at Irshansk Mining and Processing Plant.
According to the company’s press release on Thursday, this branch was shut down in October 2022. This decision was made due to the lack of contracts for the sale of ilmenite concentrate and, at the same time, significant stocks of finished products in warehouses.
Currently, the management of UMCC has signed a large contract to sell the branch’s products to a strategic North American customer. Accordingly, there is a need to restore the plant’s full capacity.
“Back in April, we gradually started preparing for the full resumption of the branch’s operations, including the full resumption of production. We made all the necessary purchases and carried out as many repairs as possible. Now we have an active contract with an American end user for 70 thousand tons of ilmenite concentrate from Irshansk GOK,” said Yegor Perelygin, acting Chairman of the Board of UMCC.
According to him, another 25-40 thousand tons are currently under discussion. Additionally, the company is preparing to start negotiations for 30 thousand tons for a European end user, with a shipment plan for the fourth quarter of this year.
“Since we have almost sold the old stocks in our warehouses, which is good news, the resumption of quarrying is critical,” said Perelygin.
He specified that the company plans to produce 12 thousand tons of ilmenite concentrate per month by the end of this year.
“We understand that if there is an opportunity to increase production, we will definitely press the gas pedal. But there are several barriers and negative factors that constantly make adjustments to our production program. Everyone is well aware that we are in the active stage of the war and need to prepare for surprises or unplanned problems. In particular, it concerns the stabilization of electricity supplies to the plant,” added the CEO.
He also explained that UMCC has come a long way to qualify IGOK’s ilmenite concentrate for the North American market, and it is strategically important for the company to maintain this momentum until 2025, as then we can talk about long-term contracts and long-term product qualification.
“My personal dream is that 2/3 of IGOK’s products should be exported to the market that is strategic for us as a country and that our cooperation with the American chemical industry should only strengthen and the volumes should grow. This will allow us to move to planning horizons of 1-3 years, even during the war, and will have a good stabilizing effect,” Perelygin explained.
According to him, this will also allow us to move to a broader development of the local resource base, in particular by returning to the implementation of the capital investment program.
“Unfortunately, due to the lack of long-term money and a large number of unpredictable events, the last two years have been practically on hold,” summarized the acting chairman of the board of UMGC.
United Mining and Chemical Company started its actual operations in August 2014, when the Ukrainian government decided to transfer the property complexes of Vilnohirsk Mining and Metallurgical Plant (VGMK, Dnipropetrovska oblast) and Irshansk Mining and Processing Plant (IGOK, Zhytomyrska oblast) to its management. On December 8, 2016, the state-owned enterprise was transformed into PJSC UMCC, and on December 26, 2018, it was transformed from PJSC to PrJSC.
UMCC used to sell its products to more than 30 countries. The main sales markets were the EU, China, Turkey, as well as the USA and African countries.
