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  • In Q1 of 2015 Ukrainian steelmakers received about 1 million tons of flux products less than planned

In Q1 of 2015 Ukrainian steelmakers received about 1 million tons of flux products less than planned

As a result of the destruction of the railway infrastructure of Dokuchayevsky flux-dolomite plant (Dokuchaevsk, Donetsk Region) the shipping of their products cannot be continued to end users. As a consequence, stoppage of plant operation led to a shortage of raw materials on the market.

17 April 2015

"The lack of supply of DFDP products leads to a significant deficit of flux raw materials on the market, primarily in the metallurgical industry," says DFDP board member Sergey Onishchenko. "As a result of constant disruptions of DFDP work because of the military conflict in the region, during the 1st quarter of 2015 metallurgical enterprises of Ukraine received about 1 million tons of flux products less from DFDP. Domestic metal manufacturers were forced to import raw materials from abroad, leading to a problem with the purchase of currency in the interbank market," said Sergey Onishchenko.

"The situation with limestone raw materials for the steel industry in the market now resembles what is happening with coal mining and anthracite. Before the war, the production of flux completely covered the needs of the domestic market and I could even speak of a certain surplus of products", said Roman Topolyuk, analyst from the investment company Concorde Capital. "The destruction of infrastructure and the change in the legal status of the areas where the production companies have a presence has led to a break of the established economic chains and a shortage of products. In fact, almost the entire sub-sector of domestic MMC will be forced to stand idle until peace is restored in eastern Ukraine, although direct consumers of products are in close proximity," said Roman Topolyuk.

In 2014, total sales of fluxing materials of DFDP amounted to 4.8 million tons. Before active hostilities the plant shipped up to 500 thousand tons of products per month. In January 2015 shipments dropped to 150 thousand tons per month and, after destruction of the railway infrastructure, the company stopped working altogether. After repairs from April 1 the plant reopened, shipping 72 thousand tons during the first ten days of April. However, on the night from 10 to 11 of April, due to an explosion on the Elenovka-Yuzhnodonbasskaya rail haul, the plant again stopped operations. The cause of the explosion is unknown. Work is underway to assess the time and costs required to restore traffic on the rail haul.

As of April 14, production has stopped, 1250 factory workers have no work, and the remaining 970 are employed in repair and reconstruction work and in security.

We recall that in February 2015 it was decided after a 3-month workout of the available industrial explosives at DFDP to place the facility into long-term storage. Full-time operation of the plant will be resumed after threats to the safety of the workers are removed, after the recovery of energy and rail infrastructure, and once the processes for delivery of the explosives required for the production have been established.

Reference

PJSC DFDP is developing the Elenovskoe field. The company specializes in the extraction and production of limestone and dolomite for the steel, glass, cement, sugar, construction, chemical, and other industries. The volume of commercial products in 2014 stood at 4.8 million tons. Operational management of the DFDP is performed by the UMG Holding, which combines the assets of mining and processing of mineral raw materials of the SCM Group.

United Minerals Group (UMG) is one of the largest holdings in Ukraine, engaged in the mining and processing of raw mineral materials (white plastic clay, flux limestone and dolomite, microspheres, ash and slag materials, and others). UMG is part of the financial-industrial group called System Capital Management (SCM). UMG employs more than 4,500 people and operates 16 quarries, extracting 11 million tons per year, and selling 11 types of commodity products in 25 countries.