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steel plants of Metinvest (METINV), Ukraine’s largest steel producer. Recall, in December Ukrainian Railway reported having increased the throughput capacity of the Komysh-Zorya–Volnovakha railway section to 24-28 cargo trains per day from 16 trains per day previously.
● Ferrexpo
Court requires the owner of Ferrexpo Zhevago to pay UAH1.5bn debt to central bank. A Kyiv district court ruled on Oct. 1 to require billionaire Kostyantyn Zhevago to pay a UAH1.54bn debt to the National Bank of Ukraine (NBU) owed by his bank, Finance and Credit. Zhevago, whose main asset is a majority stake in iron ore miner and pellet maker Ferrexpo, offered his personal commitment to repay the refinancing loan gained in 2015, as reported by the NBU on its website on Oct. 2. Finance and Credit Bank was declared insolvent in September 2015 and Zhevago “failed to demonstrate his good faith to repay the loan”, the NBU wrote. The NBU decided to file a lawsuit against Zhevago in December 2015. Court hearings dragged on for almost 3.5 years, with the NBU alleging the defendant did his best to delay the hearings. The NBU said it will use all legal means at its disposal to collects funds from Zhevago as soon as the court’s ruling comes into force. This was a first-tier court ruling so it will come into force either if Zhevago won’t appeal (which is unlikely), or an appellate court upholds the ruling. Such news could have been ignored if not for a report that Zhevago was declared a suspect in an embezzlement case by the State Bureau of Investigations. That suggests there is political will to prosecute him (or at least, there is no political will to prevent such prosecution). If that’s the case, a appellate ruling could arrive much sooner (regardless of the politics, there is little doubt that it will confirm the first-tier court’s ruling). The key question is what means the NBU will use to recover UAH1.54bn from Zhevago, and whether this could affect Ferrexpo or Zhevago’s ownership in it. In our view, there is little chance that it will affect Ferrexpo: Zhevago has a lot of other assets in Ukraine that could become more easy targets for the NBU, so the regulator won’t need to go to Switzerland to try and claim Zhevago’s equity stake. In any case, Zhevago has enough time to settle the dispute with the NBU without any harm to his property in Ukraine, so we see little risks for Ferrexpo operations from this news.
Ukraine’s largest iron ore pellet exporter Ferrexpo signed its first long-term contract for iron ore pellet supplies with Germany’s ThyssenKrupp in October, the company said in an Oct. 29 press release, as cited by Interfax-Ukraine. In addition, Ferrexpo plans to increase pellet production volumes to more than 11 mmt in 2020 from the expected 10.4-10.6 mmt in 2019, the release said. In 2021, Ferrexpo plans to boost its pellet production volumes by a further 10%, according to the release as cited by Interfax-Ukraine. The company also said that the recent temporary CEO changewill enable its majority owner, Kostyantyn Zhevago, to focus on his legal issues. The new acting CEO, Chris Mawe, has been with the company for more than 11 years and will continue serving as Ferrexpo’s CFO.
● DTEK
DTEK Energy boosts coal mining 8% in September. Ukraine’s leading coal and power holding DTEK Energy (DTEKUA) produced 16.5 mmt of raw coal in 9M19, according to its September 4 press release. This is about a 6.7% y/y
76 UKRAINE Country Report November 2019 www.intellinews.com