28 August 2014
As of Aug. 27, all the coke production plants of Ukraine’s Donetsk and Luhansk regions (collectively known as Donbas) were non-operating due to the war in the region, according to a National Security and Defense Council (NSDC) report issued the same day. Power holding company DTEK reported that Yenakiyeve Coke and Yasynivka Coke (YASK UK) are disconnected from power, while no information was available on other coke plants, including Metinvest’s Avdiyivka Coke (AVDK UK). DTEK also reported that its Komsomolets Donbasa (SHKD UK) mine was disconnected.
Meanwhile, the town of Noviy Svit near Donetsk city, where the Starobesheve Thermal Power Plant (TPP) that belongs to Donbasenergo (DOEN UK) is located, has been shot up by artillery fire, the NSDC reported on Aug. 27. The situation has also become “tough” in the town of Novoazovsk, located between the Russian border and the city of Mariupol (population 458,500), where Metinvest’s core steelmaking assets are located. These cities were abandoned by the pro-Russian separatists three months ago, while now they are being attacked by the Russian army, according to the Information Resistance website.
Alexander Paraschiy: The Kremlin has significantly escalated its military offensive this week and the increased area under control of anti-Ukrainian forces in Donbas is a problem for the Ukrainian government. The anticipated victory of Ukraine’s army could be further delayed, if not derailed. Russia’s escalated military offensive adds more risk to the Donbas-located assets of Metinvest (METINV), Industrial Union of Donbas and DTEK (DTEKUA), though the risk isn’t new.
A new source of worry for us is the artillery shooting of the nearby Starobesheve TPP, a location that had been earlier freed from pro-Russian forces. Now that the site is under serious risk of attack from Russian forces, we see a real threat that Donbasenergo’s only remaining power station will be damaged, as what happened with its Sloviansk power station two months ago. Needless to say, this would be a disaster for the company. Pro-Russian forces expanding their controlled territory in Donbas also renews the risk for some Donbas-located assets belonging to egg maker Avangardco (AVGR LI), which are currently located outside the conflict zone.