The auction of the state-run Ukrainian United Mining and Chemical Company (UMCC) — Europe’s largest titanium and zirconium miner — scheduled on Oct. 29 did not take place due to a lack of bidders, according to the State Property Fund.
This is the second time the auction’s been canceled, after the first unsuccessful attempt to sell the plant in August.
The State Property Fund was about to sell it for $140 million (Hr 3.7 billion) as a starting price.
Although a dozen companies have already shown interest in buying the plant, including investors from Australia and Japan, the fund said it only received two applications, which is not enough to set up the auction.
One of the undisclosed bidders was rejected due to problems with their submitted documents. According to the law, a privatization auction can’t take place with a single participant.
The fund still wants to hold the auction before the end of 2021, but market players doubt it.
“Believe me, this will not happen even on a new date,” Andrey Brodsky, CEO of Ukrainian titanium producer Velta and potential bidder, wrote on Facebook on Oct. 29.
Most companies decided not to participate due to the fund’s weak level of company’s preparation for privatization.
“It has to be prepared properly. Otherwise, no self-respecting Ukrainian or foreign strategist will go to the auction,” said UMG Investment, a company belonging to Ukraine’s richest oligarch Rinat Akhmetov, that is also interested in the auction.
Massive asset
The UMCC — a 90% export-oriented company — extracts on average 300,000 tons of titanium ore annually at its two plants, in Zhytomyr Oblast and Vilnohirsk, a small city of 22,000 people in Dnipropetrovsk Oblast.
The factory sells two-thirds of its production to manufacturers of ceramics, paints and varnishes.
Of the remaining 100,000 tons, 60% the company sells to the U.S. chemical giant Chemours under a long-term deal. The rest is divided equally between domestic needs and sales abroad via trading companies.
Besides titanium, the company also produces zirconium concentrate, widely used in solar batteries, ceramics, and nuclear energy.
Firtash business
Titanium production is the core business of oligarch Firtash’s Group DF, which previously owned the plants.
The UMCC has long been owned by, directly or through proxies, by Firtash, now exiled in Vienna for over seven years.
Firtash’s company Crimea Titan controlled both plants on Ukraine’s mainland before 2014, but the state took over and created the UMCC after Russia annexed Crimea and Ukrainian assets.
Firtash has been under house arrest in Austria since 2014, fighting to avoid extradition to the U.S. to stand trial on bribery charges, which he denies.
The National Security and Defense Council imposed sanctions on the oligarch on July 18, saying his plants supplied titanium to Russia’s defense industry, which Firtash’s lawyers denied.
On Aug. 10, Firtash’s Group DF was reportedly denied a titanium mining license in Zhytomyr Oblast for allegedly financing terrorism. Group DF claimed it had already won the bid, but didn’t obtain the license.
United Mining Chemical Company won the Aug. 9 tender to mine for titanium in the area with a bid of Hr 123 million ($4.5 million).
According to Group DF, its subsidiary, the Mezhyrichensky mining and processing plant, had already won the bid but didn’t receive a permit after it was accused of “financing terrorism and acting in the interests of the Russian Federation,” which the group called “baseless accusations.”
The company plans to appeal the decision.
Read also: Privatization of former Firtash titanium plant postponed due to lack of bidders
