The privatisation of the state-owned stake of JSC «United Mining and Chemical Company» (UMCC), most of whose production facilities are located in Vilnohirsk, Dnipropetrovsk region (Vilnohirsk Mining and Metallurgical Plant), has become a landmark event for the Ukrainian economy. The privatisation itself, once approved by the Cabinet of Ministers of Ukraine, will bring over $95 million to the state. However, the main goal is to create the preconditions for the development of the titanium industry in Ukraine. The only participant in the auction was «Cemin Ukraine» LLC, which applied to acquire the 100% stake in the UMCC put up for sale.
The privatisation of JSC «United Mining and Chemical Company» was launched back in 2021 as part of the Big Privatisation programme. The starting price has not changed since then – ₴3.7 billion. But in 2021, this amount was $135.6 million, and during the auction, in dollar terms, it reached only $90.2. The cost fell by almost a third due to the war. However, the fact that JSC «United Mining and Chemical Company» has found an investor gives hope for the growth of Ukraine’s titanium industry.
The over $95 million raised from the sale will go to the state budget of Ukraine and will be used to strengthen the country’s defence capabilities.
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JSC «UMCC» is Ukraine’s largest producer of titanium raw materials, accounting for 90% of its exports. The company is engaged in the extraction and processing of titanium ores, which are strategically important for the defence, aviation and space industries. UMCC comprises two large plants – Vilnohirsk Mining and Metallurgical Plant (VMMP) in Dnipropetrovsk region and Irshansk Mining and Processing Plants in Zhytomyr region.
The participation of a foreign investor in privatisation is an indicator of faith in the Ukrainian economy and its recovery. «Cemin Ukraine» LLC, which acquired JSC «UMCC», was founded by NEQSOL Holding, an international group of companies with Azerbaijani capital, which already owns the second largest mobile operator in Ukraine, Vodafone Ukraine.
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NEQSOL Holding has extensive experience in the mining business. The company has two major divisions: Nobel Oil E&P and Nobel Energy. The former is engaged in exploration and production, while the latter provides services to oil and gas operators. NEQSOL’s oil and gas production business is concentrated in Azerbaijan, the US and the UK. NEQSOL is more of a service organisation. That is, it provides its equipment and employees for oil and gas production to other businesses. The company also intends to cooperate with Naftogaz to jointly produce hydrocarbons in the Black Sea. NEQSOL is also active in the construction industry. In the South Caucasus, NEQSOL has a plant under the Norm brand, which is the largest producer of high-quality cement in the region. It has a certificate from the American Petroleum Institute (API) for the use of cement in oil wells, which is an indicator of highly technical quality.
According to the privatisation terms, the new owner is obliged to invest at least USD 9.7 million in technical re-equipment and modernisation of the enterprise, as well as to repay debts to employees and the state. This creates opportunities to improve the technological level of production, which could boost Ukraine’s export opportunities and contribute to the competitiveness of the domestic titanium industry on the global stage.
This is a landmark event for Dnipropetrovsk region, as Vilnohirsk Mining and Metallurgical Plant (MMP) is a strategic enterprise in the region and a major employer of the region. The company has prospects, as it can move from solely extracting raw materials to producing finished products. This can be enhanced by creating a titanium cluster on the basis of Vilnohirsk MMP. This cluster could become the basis for the production of titanium slag, TiO2 pigment and titanium products. The cluster could include Motronivskyi and Demurinsky plants and the facilities of the former Russian VSMPO-AVISMA Corporation, even under the management of several independent operators in parallel. After all, these facilities are still waiting for new owners.
In particular, on 9 July 2024, «Demurinsky Mining and Processing Plant» LLC (DMPP) was included in the list of large-scale privatisation. The company is located in the Sinelnykivskyi district of Dnipropetrovsk region and develops the Vovchanske titanium-zircon deposit with reserves of 5 million tonnes of raw materials and a 9% grade of heavy minerals. The proceeds from the sale of Demurinsky MPP will be allocated to the Fund for the Elimination of the Consequences of Armed Aggression. In the near future, The State Property Fund of Ukraine will hold auction commissions to propose starting prices and terms of sale. After the Cabinet of Ministers of Ukraine approves the starting prices and terms of sale, The State Property Fund of Ukraine will put Demurinsky MPP up for privatisation auctions.
We invite you to visit the website of the Dnipropetrovsk Investment Agency, where you can also find small-scale privatisation objects from the Regional Office of the State Property Fund.
