The commercial tender to sell a 30% interest in the Mykolayiv Alumina Plant (MAP) ended the Monday before last with the so far preliminary victory of Ukrainian Aluminum. The latter offered UAH 547.2 million (the top bid) for the proposed package and undertook to fulfill the conditions fixed by the tender, such as building in Ukraine an aluminum works with a rated annual capacity of 100,000 tons of product, and increasing MAP capacity to 1.3 million tons of alumina (the bulk form of aluminum) per year.
According to Interfax-Ukraine, Ukrainian Aluminum was registered in the Leningrad district state administration of Kyiv on March 11, 1999. The State Property Fund, which conducted the tender, told the agency no other details about the company.
To bridge the information gap, The Day’s corespondent rang Moscow, where the office of Siberian Aluminum is located, and as soon as an hour later he was received in the Ukrainian Aluminum Kyiv office by vice president of Siberian Aluminum, Herman Tkachenko.
“One can guess that the tender winner, Ukrainian Aluminum is a subsidiary of a more powerful company, Siberian Aluminum.”
“It is too early to speak of victory. The tender will only be officially concluded in a week. Only then will we give our, so to speak, final comments. Meanwhile, we can only express satisfaction over the tenders’ preliminary results.”
“Is Ukrainian Aluminum part of Siberian Aluminum?”
“It is our partner dealing, in particular, with the supplies of our products to Ukraine’s domestic market. This company, a resident of Ukraine, was set up with Siberian Aluminum’s participation a little more than a year ago. Its authorized capital is $120 million. A fourth of this amount belongs to the residents of Ukraine, the Ukrainian Metallurgical Company and Ukrsibbank (Ukrainian-Siberian Bank). One of the main objectives is to participate in the privatization of MAP. Siberian Aluminum has already invested via Ukrainian Aluminum about UAH 35 million in the acquisition of this enterprise’s stock. In addition, the young company has been dealing with the Ukrainian aluminum market development, cooperating with large consumers of aluminum products.
“We differ from our rivals in having a strategy to develop the domestic market of aluminum recycling. We not only deal in exporting but also manufacturing aluminum-based semi-finished goods. On its part, MAP will become a genuine participant in the program and the concrete technological process of the production of not only the primary aluminum but also the high-tech finished items which will return to Ukraine and work for its economy. In particular, Ukrainian Aluminum is now helping the Zaporizhzhia Aluminum Combine to organize the production of aluminum foil. There is a real opportunity to establish a closed-cycle manufacturing process and the CIS’s largest vertically integrated aluminum company.”
“How many additional jobs are you going to create in Ukraine?”
“The tender’s main condition is construction in Ukraine of an aluminum works with a capacity of 100,000-130,000 tons. And Siberian Aluminum decided to do this. In real terms, it means about three or four thousand jobs. But let us not forget we will simultaneously place orders with the Frunze Research and Production Association in Sumy, Pivdenmash, and Ukrhrafit (Ukrainian Graphite), accounting for about 60% of the plant’ cost. Moreover, a fully-renovated MAP (owing to an effective owner) also means the development of infrastructure and payment for railway and port services.”
“Will the aluminum works situated in Mykolayiv?”
“There are several approaches to this today. It is possible to place it in the Mykolayiv region, thus creating a single complex — MAP, the port, and the aluminum works — and reducing the costs. Another viewpoint is to build the works in a depressed area, so that it could catalyze the growth of the latter. However, due account should be taken of such factors as ecology and access to electric power. So Mykolayiv is today competing with Zaporizhzhia, Dnipropetrovsk, and the Sumy-Kharkiv-Poltava triangle, where electric power may be borrowed from Russia. This question will be solved together with a state-run commission. Ukrainian Aluminum has signed a protocol with the Zaporizhzhia Titanium Institute. The latter has some experience in implementing a state-sponsored program of aluminum industry development, so it will be the chief designer of the works. We also hope for assistance from the state Industrial Policy Committee.”
“Will MAP see any staff changes in the nearest future?”
“Let us wait for the final tender results. Should the preliminary decision be confirmed, we will coordinate our intentions in this matter with all the other shareholders and the state. But I must say the enterprise is now headed by Mykhailo Stoliar, one of the most skilled experts in the aluminum industry. This is also shown by the enterprise’s latest performance which radically differs from what was earlier. So there will be no cardinal changes. But in any case some staff changes are inevitable.”
“Have you finally written off Vitaly Meshyn (the former MAP manager) or he can still find where to apply his capabilities?”
“My attitude toward him is ambivalent. We have been working together very long, and I cannot say we were always satisfied with this. When he was in dire straits, when MAP was blocked, we bailed him out, helping to sell the alumina blocked by firms controlled by the Trans World Group and to streamline bauxite supplies. The plant began to work again. But then Mr. Meshyn decided to go his own way. I think assessing his activities is not only the job of law- enforcement bodies but also a question of conscience and morality.
“On the other hand, I cannot but admit he is a very strong personality (by the way, I, as a Ukrainian citizen, do not share at all his political views and think Mr. Meshyn should take a lot of blame for the recent MAP crisis). So I cannot say we rely on him. But it is certain that he has devoted all his life to this enterprise and wielded absolute authority there. Yet, he must part with his illusions. The time of efficient owners has come, and this is a great problem for Mr. Meshyn.”
“Are you going to cancel altogether the tolling scheme of raw-material supplies to MAP or still leave some elements of it?”
“The current market situation allows the plant to work without tolling. But that could change. And while the plant was being literally killed over 5-7 years, this scheme helped it earn at least some money. So I can say we will surely fulfill the program of switching over to direct supplies of raw materials, but tolling will be partially used to pay off its millions in accrued debts and replenish its deficient liquid assets.”
“Will the plant workers feel any changes in the social policy?”
“We do not dissociate ourselves from the current MAP management. The ongoing positive processes at the plant, including wage raises, is to their credit. This tendency will be kept intact. Simultaneously, there will be a tougher attitude toward discipline violations and drunkenness. There are many people who want to work at this enterprise, in other words, there is competition on the labor market, so we will take advantage of this in the enterprise’s interests.
“We will further deal with the social sphere together with the oblast governor. When the new mayor of Mykolayiv is elected, we will also get in touch with him. When a plant works effectively and pays taxes, it naturally takes a heavy burden of social responsibility for the whole infrastructure. But I say again we can only achieve success by means of strict discipline. Increased cost-efficiency and profits make it possible to pay high wages.”
INCIDENTALLY
MAP management is satisfied with the preliminary results of the commercial tender to sell a 30% stake in this enterprise, Mykhailo Stoliar, the enterprise general manager and chairman of the board of directors of MAP, told journalists. Having noted that the tender was conducted in full compliance with the conditions set by the state, he expressed the opinion that the preliminary winner, Ukrainian Aluminum, could emerge as the final winner, Interfax-Ukraine reports.
