Ukraine MPs mull revision of privatization of iron ore mines

Ukraine’ Parliament members are mulling a review for privatization of large state enterprises, including of the state iron ore holding, Ukrrudprom, Interfax reported on Apr. 22. The head of the privatization committee at the Parliament Boris Filatov claim there have been certain law violations during the privatization process (in the years 2004-2005). The General Prosecutor’s office has initiated a case regarding privatization of Ukrrudprom in 2004, according to Filatov.

Among the main assets of Ukrrudprom before the privatization there arethree iron ore mining subsidiaries of Metinvest (METINV): 50%+1 share interests of Northern Iron Ore and Central Iron Ore each, and 37.6% interest of Inguletsk Iron Ore.

Roman Topolyuk: The General Prosecutor’s office is yet to confirm the opening of the case regarding the privatization of Ukrrudprom. Nationalization risks regarding key Metinvest iron mining subsidiaries (which regenerated 65% of the company’s EBITDA in 2014) cannot be excluded in general, but there is still a long way to go, before this reprivatization could be implemented, if ever. Firstly, we believe there is still a lack of political will to pursue the large scale review of the privatization in Ukraine, which could trigger an undermining of the local political environment. Secondly, subsidiaries of Ukrrudprom, including 50%+1 stakes in Northern, Central iron ore companies and a 37.6% stake in Ingulets Iron Ore, have been sold according to a special law approved by Ukraine’s parliament. So, from a legal standpoint, the potential court hearings could last for an extended period of time, before any material decision could be brought to force.