Velta industrial and commercial firm LLC with titanium ore production assets in Ukraine (Kirovohrad region) has agreed to supply $100 million of ilmenite, a titanium feedstock, under a five-year supply contract with the Traxys Group, a global commodity trading group, aimed at meeting the needs of the North American market.
Velta said in press release that it has been working in the U.S. market for seven years.
“Given that North America is one of the most stable and fast growing markets, we have decided to enter a longer-term contract, which will ensure additional stability of the company’s operations,” CEO of Velta Andriy Brodsky said.
He said that the main competitive advantage of Velta is that the company produces high-quality high-titanium feedstock, which is currently scarce in the world and in great demand in the U.S. market.
“Titanium Dioxide pigment is a core business of our group. We are pleased to partner with such a high quality and reliable miner as Velta,” Traxys Head of Industrial Minerals Eli Skornicki said.
According to the press release, the ultimate consumer under the contract is Chemours. Chemours is a new kind of chemistry company driven by their purpose to create a more colorful, capable, and cleaner world through the power of chemistry. Chemours is one of the world’s largest manufacturers of titanium dioxide (TiO₂). The company’s Ti-Pure™ brand delivers industry-leading innovation to address the growing worldwide demand for high-quality TiO₂ by developing brighter, more efficient pigments for the coatings, plastics, and laminates markets. Its annual sales exceed $6.5 billion. Chemours employs more than 7,000 people worldwide.
Traxys, headquartered in Luxembourg, is a physical commodity trader and merchant in the metals and natural resources sectors. Its logistics, marketing, distribution, supply chain management and trading activities are conducted by over 400 employees, in over 20 offices worldwide, and its annual turnover is in excess of $7 billion. The group serves a broad base of industrial customers and offers a full range of commercial and financial services.
Velta LLC has been mining and processing titanium feedstock at Byrzulivske deposit in Kirovohrad region since 2012. The company also holds a license for the industrial development of Likarivske deposit with similar feedstock. From 2012 to 2019, Velta mined 1 million tonnes of ilmenite. The total number of jobs exceeds 500. Velta founded a research and development center Velta RD Titan that works on creating new methods for processing titanium feedstock.
Velta industrial and commercial firm with titanium assets in Ukraine will select a site for building a pigment titanium dioxide plant after the presidential election, if it is located in Ukraine or Israel, Director General and the owner of Velta Andriy Brodsky has said in an interview with the PERSONA magazine.
“The development philosophy of our company is based both on expanding the resource base and vertical integration. Velta is clearly pursuing a processing policy, moreover, in the format of an international company. The Israeli Ministry of Economy has somewhat accelerated events and published information about the prospects for building a plant in their territory immediately after the first stage of negotiations. Yes, we want to diversify our activities, but continue to work in Ukraine. However, Israel has special conditions and benefits for investors, even with their consideration to build a plant in Ukraine is cheaper and we will seriously consider this possibility. The general design and technological work is under way. Our company will decide after the presidential elections where the production facilities are located,” Brodsky said.
According to him, it is almost impossible for a business in Ukraine to develop due to corruption.
“Videos, which say that over the past four or five years more than 100 factories have been built and opened in Ukraine, are actively being spread online… Yes, they have built. And I, as a person who has built an entire industrial complex, I can assert that the state is not involved in any way. Plants are not built quickly in any country. From five to 10 years should pass from an idea to the direct implementation. And the fact that their launch took place in the past few years does not mean that this fact was somehow promoted by the current government. They only hinder the development of business in Ukraine,” the owner of Velta said.
He said that the presidential and parliamentary elections introduce additional instability in the economy, and in the second half of 2019 a default is possible.
“Of course, these processes [elections] will affect the economy. However, I would say, not so much the process, how much the result will matter. If nothing changes, Ukraine will be slowly stagnating. Any change in power, especially it is about the president and the parliament, causes serious and abrupt changes in the economy with consequences, most likely already in the second half of the year. A default is a completely possible consequence of the next elections,” the top manager said.
At the same time, the businessman sees a positive in the default.
“The fact is that this is not bad at all. On the contrary, we can have big problems if there is no default. I believe that surgery is required. You know what happens if you do not treat peritonitis. It is better to make a surgery and remove the cause of inflammation in order to become healthy in just a few days, than to expect fatal consequences. This is the most relevant for the country,” Brodsky said.
At the same time, he said that the positive things will be “if there is another president, but not immediately. It will be necessary to survive the economic shock, and after that – to observe “recovery,” he said.
Regarding the titanium business in Ukraine, the head of the company said that the assets put up for privatization are almost exhausted, and the scandals that are unfolding around the titanium industry do not contribute to investment attractiveness. However, there are deposits of titanium ores in Ukraine: loose (sand) and indigenous (rock). Today, in Ukraine, and his company in particular, develops only sand.
“If we talk about competition in Ukraine, it is small. There is state-owned United Mining and Chemical Company, which extracts about 50% of titanium ore in Ukraine. Velta is in second place with a 30-40% share of production. We have deposits for twenty years, they have deposits for no more than two years,” the businessman said.
Earlier, holding company Velta Group Global ltd. (VGG, the United Kingdom) in response to a request from Interfax-Ukraine said that the Ministry of Economy and Industry of Israel reported on the allocation of a land parcel for Velta Titanium, a holding structure of Velta Group Global, to build a plant for the production of pigment titanium dioxide.
The capacity of the plant will be 40,000 tonnes of pigment per year with a further increase to 70,000 tonnes. VGG plans to process its own titanium ore (ilmenite), which is produced by the Ukrainian subsidiary Velta at the Birzulovske field (Kirovohrad region). The volume of investments will amount to $150-200 million. At the first stage, 450 jobs will be created, at the second – 600 in total.
At the end of 2017, Velta Group Global announced its intention to launch an R & D center in Ukraine. The plant in Israel will become one of the platforms for testing the developments of the Ukrainian research center. The site for the pigment manufacturing plant is located in the Mishor Rotem industrial area.