Hares Engineering

Who will complete an uncompleted construction project?

Government has promised to make a final decision on the completion of Krivyi Rig mining and processing plant of oxidized ores immediately after the May holidays.

"KGOKOR has not been built for nearly 15 years, and some have a desire to continue the same for another 15 years. As soon as we started this project, a lot of interested people appeared who pull it into different directions. Let them act but after May 10 we will get involved more, "- said Prime Minister Yuriy Yekhanurov the day before first May holidays.

In the meantime, a conceptual decision is made: first, KGOKOR needs to be completed, and secondly, it is necessary to attract investors. At the same time attracting such investors should be in transparent and competitive manner. That is what Government wrestles with now.

In the meantime, delaying with the decision as to construction of KGOKOR breeds new statements by individual players, not increasing the actual number of applicants to participate in the project. So far there are two: the Ukrainian-Russian consortium "Smart Groups" - "Metalloinvest" and the world's largest steel company Mittal Steel. However, only the first submitted their proposals for the establishment of a joint venture enterprise.

"Smart Groups" and Metalloinvest offer to build first pellet production capacity of 13.5 million tons in two years, investing $ 400 million and then to proceed to completion and launch of crushing and enrichment complex of oxidized ores. In doing so, the control share in the JV will be created for the state.

According to experts, the establishment of joint venture enterprise for the plant completion with the Ukrainian-Russian consortium is of the greatest national interest. Thus, the director of the Center for Social Studies "Sofia" Andrei Yermolayev believes that companies selling such plant as "Krivorozhstal", as well as titanium industry and GOKs should be limited to investors who will not destroy the established supply chain management in the country, and vice versa - will use the internal integration. "We should strive not to "merchant ", but to geo-economic, even to the planned vision of the consequences of the sale of a large object", - emphasized Andrey Ermolaev.

While the Ukrainian government ponders over the future destiny of Krivyi Rig plant, losses due to the plant property larceny and its sale at low prices exceed 40 mln. According to the Accounts Chamber, KGOKOR still continues to suck out money from the national budget. in 1992, after the object became the property of Ukraine, Verkhovna Rada and Cabinet of Ministers allocated more than 62 mln. where 33 mln were for the construction works only.

"Failure to comply with the decision on the sale and the completion of the plant leads to such negative social and economic phenomena as the loss-making and inefficient activities put in operation plant divisions," loss of previously created assets and budget funds, deterioration of technical state of the unfinished sites and larceny of property, a significant reduction of employment and wage arrears. To keep the management of industrial complex costs, on average, more than 11 mln. every year, "- said the head of the Accounting Chamber Valentyn Symonenko.

In the unanimous opinion of experts, under the current circumstances it is of State interest to "get rid" of the suspended object as soon as possible by transferring it into the hands of the investor.

Vladimir Piven, director general of JSC "InGOK:

- Our factory announced its interest in the completion and launch of the KGOKOR five years ago. In 2000, me and the Minister of Industrial Policy of Ukraine Vasily GUREYEVA prepared a letter to Ukrainian President Leonid Kuchma, which offered various options for launching KGOKOR based on iron ore of Ingulets GOK. As one of the ways to solve this problem we proposed to lease nonukrainian part of KGOKOR for 40-50 years. But, again, the official position on this matter has not been developed in those years. In addition, the state did not have clear position on what to do with the shares of other parties of the construction of the object. Today, the domestic metallurgists face issues of the introduction of new technologies. The process of preparation of iron ore, developed in the past century and before, requires a qualitative improvement. That amount of gas and dust, present today in the production of sinter and pellets, future energy costs for iron and steel are forcing us to look for opportunities to move to the energy saving technology of resources and provide more environmentally clean production: blast furnace production of primary iron using ITmk3 technology. This technology will allow us to make coke production a history. All the efforts of the Ukrainian metallurgists aimed at improving the already outdated modes of production of steel, are ineffective, because nothing qualitatively new is able to come up. City of Krivyi Rig is the concentration of huge mining and beneficiation facilities, coke, blast furnace and steel production, but therefore the city and its inhabitants are in dire need of addressing the pressing environmental problems. One of the options for such "unloading" of the city - the moving mining and smelting complex in the industrial Krivbass to KGOKOR. This is where you can get more of the iron-ore raw materials and manufacturing processes, even receiving the primary iron and, in certain amounts, it may produce steel. The main supplier of raw materials for KGOKOR can be Ingulets GOK at the initial stage - the company that has only one process stage. First, pellets are made of magnetite concentrate, in the future it may produce a semi-oxidized ore, thus reducing the cost of transporting ore, because the production of one ton of concentrate involves the transport of 1.5 tons of waste rock. With regard to the possible volume of Ingulets concentrate supply to KGOKOR, we are ready to load all three of the burning cars of pelletizing factories of this company, though at first it is necessary to have high grade Russian concentrate.

Source:Ukrrudprom

12 May 2006