The State Property Fund of Ukraine does not consider the company Interlink’s proposal to invest in Zaporozhye Titanium & Magnesium Combine

The State Property Fund of Ukraine as a body that manages the corporate rights of the state in Zaporozhye Titanium and Magnesium Combine (ZTMC) regularly receives letters with proposals from third parties regarding various options for cooperation with the enterprise. In particular, such proposals were received by the State Property Fund and other state authorities on behalf of Interlink. However, today, according to the analysis of the financial and economic situation of the enterprise and the developed model of financial recovery of the enterprise, there is no need to attract external investors to finance the financial recovery plan of the enterprise.

The plan of financial recovery of ZTMC is developed taking into account the peculiarities of the market price for titanium, which over the past 6 months has had high volatility in foreign markets, decreasing to $5 per kg of product instead of $9-11 in the previous period. However, the specialists of the enterprise and the State Property Fund have a joint action plan, which over the next 4 months will ensure the enterprise for break-even activities and stable margin of sales of manufactured products due to the decrease in production costs.

The proposed plan consists of four main measures. First, the transition to direct purchases of electricity on the stock exchange (as an enterprise with a price of electricity in the cost of production is more than 30%). Secondly, the transition to combined model of finished products sale on external markets, in particular, under spot and term contracts. The third, increasing production volumes from 420 to 650 tons per month to ensure economies of scale and reduction of constant costs per kilogram of finished products. Fourthly, the transition to more modern aggregates of magnesium chloride electrolysis for reduction of electricity cost and chloride consumption.

The proposed action plan will stabilize ZTMC and ensure break-even activities. Unfortunately, despite the involvement in 2013 of a private investor, who had to turn ZTMC into the most modern production of titanium sponge in the world, the company has never been modernized.

In view of false reports that in recent days appeared in the media regarding ZTMC, the State Property Fund of Ukraine appeals to the media representatives with a persistent request to comply with the standards of journalistic ethics and contact the Fund for official comment in case of publications on state-owned enterprises and activities of the Fund.