The International Group Watts Blake Bearn Minerals, known as WBB Minerals, has unveiled plans to invest 70 million euros into Ukraine within the next ten years, to increase extraction of clays and other minerals.
WBB Eastern Europe Director Viktor Levit said the company may also acquire shares in Ukrainian firms specializing in mineral extraction. WBB Minerals will finalize investment details within the next two years, Levit said.
WBB Minerals, part of the multinational Sibelco Group, was formed in 2001 when WBB&Co and Sibelco Minerals & Chemical merged.
WWB Minerals currently extracts clay in Donetsk oblast, through the joint stock company Donbas Clays, of which WBB Minerals is a co-owner.
Levit said its Ukrainian investment is a part of Sibelco’s “Go East” program, aimed at expanding Sibelco’s presence in Eastern Europe.
Go East
“By moving East, Sibelco will be closer to our consumers,” Levit said.
The “Go East” program is predominantly aimed at Ukraine. “The biggest resources of sand, kaolin and certain kinds of clays are found here,” Levit said. “Ukraine is a better place to develop the ceramic industry than even Poland or Spain.”
WBB came to Ukraine in 1995, when it created Donbas Clays in partnership with the Ukrainian clay extracting firm Yuzhno-Oktyabskie Gliny Yug. WBB made an initial investment of $1 million, which entitled it to a 51 percent share in the joint venture. The Ukrainian partner holds the remainder. Since established, $10 million was reinvested in the development of Donbas Clays.
The firm has boosted production dramatically. In 1996, it extracted 50,000 tons of clay; in 2002 –800,000 tons. The company plans to increase production by 5 percent in 2003.
“We started from nothing. There were only two people working for the company, while today Donbas Clays employs 160 people, not including about 500-600 contractors,” said Levit. “Today we’re the leading company in Ukraine in terms of profit we earn per one employee, and we’re the most advanced among companies from the WBB Group in Europe in terms of using modern technologies.”
The joint venture is now the second largest national clays producer, after Vesko company, which also works in the Donbas. Of the 3 million tons of clays extracted in Ukraine last year, the JV extracted 26 percent. Almost all that clay is exported, due to low demand from domestic ceramics producers.
Indeed, the Ukrainian ceramics industry is not a strong one. Of several big Soviet plants that produced tile, only one factory in Kharkiv is still functioning effectively.
Levit said that, in order to develop the national ceramic production market, Donbas Clays has initiated two projects.
First, in autumn 2004, Donbas Clays will launch production of so-called ceramic “composits,” which are composed of different mineral components, and are used to make tile.
“We are first in the world to produce such composits,” Levit said.
“[T]he use of composits will give ceramic producers a lot of advantages. It will take producers 39-49 minutes to fire the tile if they use composits, while usually it takes 55 minutes,” Levit said, adding that production efficiency could increase by 25 percent.
Donbas Clays has already spent $1.5 million to facilitate composit production in its Donetsk oblast factory.
Donbas Clays is also constructing a factory that will produce ready-made ceramic bodies. That factory, Donbas Ceramic Bodies (DCB), is a joint venture between WBB, Donbas Clays and Yuzhno-Oktyabskie Gliny Yug.
“Bodies” are a type of building material, which WBB also produces at factories in the UK, Germany and Portugal.
The Donbas Ceramic Bodies plant, which will be located in Slavyansk, should go online at the end of 2004.
Oleksandr Schetnikov, director of Vesko, said he welcomes the new Donbas Clays projects, because they will encourage the market. He expressed confidence that his competitor’s projects wouldn’t affect Vesko’s business.
“We are confident that we’ll maintain our position on the market,” he said.
Goals to achieve
Levit said Donbas Clays will offer consumers a range of products, including clays, composits, and liquid and powdered blends.
“Usually factories that produce blends are built in countries with highly developed ceramic markets. But we’re sure Ukraine has a chance to become such a country,” Levit said.
“Large dealers have already started giving orders for production in Romania and China; we’re struggling for them to come to Ukraine,” he said.
By using ready-made composits and blends, tile producers will save money, he said. That will encourage investment in ceramic production in Ukraine.
“We’ll make producers’ lives easier, by helping them minimize expenses,” Levit said.
According to Levit, Zeus Ceramika, a tile factory under construction in Slavyansk, shows how investors can cash in on innovations. Construction of that plant, a joint project between Yuzhno-Oktyabskie Gliny Yug and Italian Emilceramica, started three months ago. It will be the first consumer of composits on the national market, and should open next autumn.
The partners will invest $15 million to make 2 million square meters of tile. Over six years, they’ll invest $56 million to produce 8 million square meters.
“Zeus Ceramika is an example,” Levit said. “We built it to show investors how they will benefit from coming here.”
