Ukraine’s state-owned United Mining and Chemical Company (UMCC) is the first object of a large-scale privatisation program in Ukraine that will see the mineral sands mining major be auctioned off this summer with a starting price of UAH3.7 billion ($135 million). UMCC is the largest miner of ilmenite and the only miner of rutile and zircon in Europe. Ukraine also has significant logistical advantages –delivery to European consumers in as little as days, compared to up to 30 days from Asia, Australia, Africa or North America.
UMCC’s estimated global market shares for 2020 are ilmenite 2.3%; rutile 6.2% and zircon 1.4%. Reserves stand at ilmenite 4.426 Mt, rutile 274,000 t and zircon 142,000 t. The operations are divided between two subsidiaries: Vilnohirsk Mining and Metallurgical Plant (VMMP) and Irshansk Mining and Processing Plant (IMPP). Its 2020 net revenue was $116 million with EBITDA of $35 million (30% margin) and net income of $23 million (margin 20%). Sales of concentrates for 2020 stood at 298,000 t ilmenite, 38,000 t of rutile and 12,000 t of zircon. The company exports 92% of its products to 35 countries.
The privatisation timeline is as follows: this month already the final decision of the Cabinet of Ministers of Ukraine regarding the auction on the sale of UMCC was made and its terms drawn up including publication of the announcement regarding the auction date, starting price and other terms of sale. Until July 2020 there will be meetings with top-management of UMCC, visits to the production sites of UMCC and meetings with State Property Fund of Ukraine (SPFU) officials plus preparation for the auction and due diligence inclduding access to a Data Room, followed by the July 2021 auction itself. The winner of the auction will be a buyer which will offer the highest price for 100% share capital of the company and which will undertake to fulfill the terms of the auction sale.