The Acting Chairman of the Board of JSC ‘United Mining and Chemical Company’ (UMCC) Peter Davis told how the company is being prepared for privatization

Peter Davis, Acting Chairman of the Board of JSC ‘United Mining and Chemical Company’ (UMCC), described how the company is preparing for privatization in a column for ‘Economichna Pravda’.

‘For a long time Ukraine’s titanium industry has operated in the ‘gray’ zone, this means that taxes and salaries were not paid in full, which in turn became the basis for the enrichment of all known oligarchic groups.Since its establishment in 2014, JSC ‘United Mining and Chemical Company’ combining the Vilnohorsk MMC and the Irshansky MCC was influenced by financial and political groups that laundered funds from the enterprise.

However, in 2019, a window of opportunity opened for Ukraine due to the unique political situation - there was a consolidation of all government bodies, which created the prerequisites for eradicating systemic corruption in the public sector as a whole and in state-owned enterprises in particular. JSC ‘United Mining and Chemical Company’ was no exception, where, despite the unprecedented confrontation of the oligarchs, the rehabilitation of the personnel and financial situation began.Ultimately, our team must establish the company’s operational processes for competitive privatization conducted by the State Property Fund of Ukraine. Due to privatization, strategic investors will be attracted who have the prospect of long-term planning and are willing to invest in the modernization of the enterprise’, Peter Davis said.

Peter Davis said he has been working with an extremely professional team to modernize the JSC ‘UMCC’ for 2 months. During this time, the updated top management was able to almost full complete the implementation of new operational production management systems.

‘The former leadership plunged the UMCC into corruption schemes. Most often, our products were shipped to questionable companies at $ 150 per ton. The market price was 220-240 dollars USA per ton in mid-December last year.

For example, remember the situation in Odesa. On May 16, 2020, I signed an order that the JSC ‘UMCC’ no longer works with the so-called “shell company” to carry out trading operations. In a few days we learned that 20,000 tons of ilmenite concentrate from the Odessa sea trade port is going to be take out by an offshore shell company, which has outstanding receivables in front of theJSC ‘UMCC’ in the amount of UAH 400 million. We reacted - shipment was stopped. I am very grateful to Dmytro Sennychenko, Head of the State Property Fund of Ukraine, for his support in this situation. As practice shows, he is ready to react to such situations at any time - day and night.

The situation in Odesa was very simple: everything that the JSC ‘UMCC’ will ship to an unknown offshore company and with a delay of payment for 3-4 months as a result will remain unpaid. Tomorrow, this company will disappear, and the JSC ‘UMCC’ will not receive money for the products. Accordingly, we will not be able to pay salaries to our employees. And this is just the top of iceberg.

In order to avoid such stories, in the interests of the JSC ‘UMCC’ and the state, at the end of May I signed an order according to which all operations on shipment of raw materials in the        JSC ‘UMCC’ were temporarily prohibited until last week. During this time, we have actively worked on changing the terms of cooperation of the JSC ‘UMCC’ with counterparties that is very important. From now on, all new the JSC ‘UMCC’ contracts with consumers contain the following mandatory clauses: contracts must be signed with prepayment and without the possibility of deferred payments, work is carried out exclusively with verified contractors who are not directly or indirectly involved in any corruption schemes, as well as there are official prohibition on privileged status or exclusivity right for all counterparties. We have already found enough reliable partners, and despite the pandemic COVID-19, cooperation with them will take place on favorable terms for the enterprise in the range of average and above average market prices’, Peter Davis says.

According to Peter Davis the JSC ‘UMCC’ is also actively working on establishing internal communications: ‘JSC ‘UMCC’ has about six hundred employees. And they all perform very complex processes every day. Now both the new leadership and the state have built a balanced information policy. Together we explain to people that the privatization of plants is not a banal sale with the loss of jobs; an investor will not spend his money to ruin the newly acquired enterprise; employees were robbed by those who most often said: ‘Be afraid, you will be sold as cheaply as possible’.

According to Peter Davis in order for the enterprise to reach its maximum cost at the time of privatization the issues of licenses must be resolved: ‘Now we are currently working intensively to collect data on deposits in order to obtain special permits for subsoil use in other titanium ore deposits within Zhytomyr Oblast for Irshansk MCC. While at Vilnohirsky MCC a mining program is being developed, which will increase the reserves of minerals to be mined. I am glad that we have developed fruitful relations with the new leadership of the State Geological Survey. In particular, recently we reached an agreement on the establishment of joint working groups on obtaining licenses by JSC ‘UMCC’ for the extraction of minerals in the new areas of the Mezhyrichny deposit of ilmenite ore. New licenses will provide extraction of raw materials for more than 10 years’.

It will be recalled, that within the framework of continuing the policy of improving the personnel and financial situation at state-owned enterprises in order to prepare them for competitive privatization tenders, the State Property Fund of Ukraine in the spring of 2020 renewed the board of the JSC ‘United Mining and Chemical Company’ (UMCC). The privatization path is beneficial for the JSC ‘UMCC’ as the enterprise’s employees will receive higher wages and social package expansion, Ukraine's budget will increase tax revenues and the State in general will eliminate even the theoretical possibility of creating corruption schemes that enriched oligarchic clans.

*All information concerning the activities of the JSC ‘UMCC’ temporarily will be published on the State Property Fund of Ukraine’s official website since access to the company’s website and its official Facebook page is blocked by former management.