A company controlled by business mogul Rinat Akhmetov has won 92.11 percent of shares in a Ukrainian coalmine holding through a privatization tender, making this the second time in recent weeks that Ukrainian bidders have beat out large foreign groups in what analysts have described as rushed privatization sales.
A company controlled by Donetsk-based business mogul Rinat Akhmetov has won 92.11 percent of shares in Ukraine’s Pavlohradvuhilya coalmine holding through a privatization tender, making this the second time in recent weeks that influential Ukrainian bidders have beat out large foreign steel groups in what analysts have described as rushed privatization tenders.
On June 30, the State Property Fund awarded the share in Pavlohradvuhilya to Avdiyivsky Coke Plant, Europe’s largest producer of coke, a steel-making raw material produced from coal. Avdiyivsky Coke Plant is 57.9 percent owned by System Capital Management, a holding company 90 percent owned by Akhmetov.
Avdiyivsky Coke Plant bid Hr 1.401 billion ($265 million) for the shares, significantly more than the Hr 898.9 million starting price, but only slightly higher than the Hr 1.335 billion offered by the second bidder, ISPAT Vuhilya.
ISPAT Vuhilya is backed by United Kingdom-headquartered LNM Group, the world’s second-largest producer of steel, and United States Steel Corporation, ranked 6th in production.
“This occurred practically without scandal,” SPF chief Mykhailo Chechetov said. “There was colossal pressure during the Kryvorizhstal sale from the Russians, and from other sides.”
The Pavlohradvuhilya sale comes two weeks after the SPF auctioned off the nation’s largest steel mill, Kryvorizhstal, for $800 million to a consortium backed by companies affiliated with Akhmetov and President Leonid Kuchma’s son-in-law Viktor Pinchuk.
LNM Group bid $1.5 billion for the mill but was disqualified, along with other large foreign steel groups, by a technicality that required bidders to produce at least one million tons of Ukrainian coke for the past three years.
Chechetov said the ISPAT Vuhilya bid was more than 95 percent backed by LNM Group companies, owned by Indian-born Lakshmi Mittal and his wife; meanwhile, U.S. Steel backed the other five percent.
LNM Group spokesperson Paul Weigh said that his company was planning on using coal produced by Pavlohradvuhilya to produce coke for its steel mills.
Avdiyivsky Coke Plant has produced more than 2,000 tons of coke since the beginning of the year, equivalent to about 22 percent of all production in the country during that time. It remains unclear how the coke plant plans on paying for Pavlohradvuhilya, as it generated profits of only Hr 7 million in 2003. The SPF first launched a tender to sell Pavlohradvuhilya last year with a starting price of about $200 million. The sale collapsed on a technicality and was relaunched March 17.
