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Zaporozhye Aluminium Combine Will this work?

18 May 2015

It is possible that the work of the Zaporozhye aluminum plant will be started again. To this end, the Cabinet of Ministers working group was created Ukraine. Its functions include the development of proposals for the resumption of activities of the enterprise. Representatives of the group will assist in coordinating the actions of the executive bodies, while ensuring work ZAP. Also, their task is to define the mechanisms and ways of solving problems concerning the return of the shares as state property and stabilization of its reduced activity. The Group's activities cover the preparation and submission to the Cabinet of Ministers of the necessary documents with proposals for follow-up to the property and shareholding ZAP.

At present production capacity of the plant are in caretaker status. Primary aluminum production has been stopped in 2011, given the high cost of electricity and the subsequent loss ratio. In addition to primary aluminum Zaporozhye enterprise produced aluminum rod, used for the production of wires. Issue volume amounted to about 1,500 tons per month. Raw materials supplied by Russian manufacturers. In the summer of 2014 the activity in this direction has ceased to pay for itself. The loss ratio is quite expected, considering the growth of tariffs for electricity, gas and transportation. Customs costs also gave itself felt with the supply of raw materials. As a result, the cost of Zaporozhye wire rod increased, exceeding the value of similar goods in Russian 3 times.

Earlier representatives of the companies mentioned on the introduction of bankruptcy proceedings. Management considers this option as the most successful way out.

March 11, 2015 the Supreme Court of Ukraine confirmed the legality of the claim for return of 68.01% stake in the plant to the state. This decision was taken due to non-fulfillment of commitments ZAP customers regarding repayment of debts, the amount of which exceeds 75 mln. USD. Negligent owners of the shares were Velbay Holdings and AvtoVAZ-Invest. In 2004, the owner of the mill was a group of «SUAL», then in 2007, control passed to the «RUSAL» corporation. And now, «Rusal» is not going to give up. Its representatives announced their intention to appeal the decision of the Ukrainian government in an international court.

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