Modern economic POTENTIAL OF UKRAINE

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Non-ferrous metallurgy

In the times of the Soviet Union, Ukraine’s non-ferrous metallurgy was part of the all-Union production chain, and specialized in production of aluminum, titanium, silicon, nickel, copper, germanium, scandium, mercury, zirconium, and uranium.

After the Soviet Union’s collapse, the industry faced a consumption crisis, which resulted in a shutdown in production of non-ferrous metals and their articles. As Ukraine rebuilt itself, the dynamics of non-ferrous metal export went rapidly up, especially of non-ferrous metal scrap. In 2000, the Verkhovna Rada (Supreme Council) of Ukraine adopted the Law “On Metal Scrap”, thus, bringing non-ferrous raw stock export shipments to order.

Nonetheless, non-ferrous metallurgy in Ukraine is a potent industrial sector. Statistically, the industry covers more than 70 enterprises of various owners, and employs over 50 ths. people. Thanks to positive trends on the world non-ferrous metal market, the situation in the industry has stabilized lately.

It is worth noting that almost 80% of Ukraine’s output of non-ferrous metals is shipped abroad because of low domestic consumption. But the local market keeps developing as each year goes by.

Raw stock base

Ukraine has a rich mineral and raw stock basis and is among the largest mineral and raw stock countries in the world. Its territory is home to more than 20 ths. deposits and ore outcrops of 114 kinds of minerals, of which 7,835 deposits of 96 mineral kinds have industrial importance and are recorded in the State Balance of Reserves. By mineral resource potential of rare metals, Ukraine is a leader in Europe and is known as a large ore province throughout the world

Regarding the ore base for non-ferrous metallurgy in Ukraine, the following minerals are produced: uranium, titanium, zirconium, germanium, graphite, nickel, gold, scandium, and hafnium. Also, deposits of minerals which are usually not associated with Ukraine have been discovered and explored: beryllium, niobium, tantalum, rare metals, copper, lead, zinc, and molybdenum.

Ukraine has a powerful mineral base of titanium: by gross resources, explored reserves of ilmenite ores outweigh the world ilmenite stock. 40 deposits are known, of which 12 have been thoroughly explored. The most important are deposits Irshavskoye and Stremigorodskoye (Zhitomir oblast), and Samotkanskoye (Dnepropetrovsk region).

The possibility to create a domestic resource base of copper is first of all related to native copper in basalts in trap formations, located in Volyn oblast. Ukraine is able to partially meet domestic demand for lead and zinc thanks to concurrent mineralization at the Muzhiyevskoye and Biganskoye explored deposits in Zakarpatye oblast, as well as at the Belyayevskoye deposit in Western Donbass.

Of extreme importance for Ukraine are aluminum ores, which are presently being imported to the country. The Pridneprovye area boasts the Vysokopolskoye deposit of ferruginous bauxites (Dnepropetrovsk region) and Smelyanskoye deposit (Cherkassy region).

With a rich mineral base and mature extractive industry, Ukraine is able to export serious volumes of ores and concentrate. From the results of 2004-05, some 52-54% in export volumes were of manganese ores and concentrates, 42-43% - titanium ores, 3.7-4.0% - zirconium ores, and 0.2-0.3% - aluminum ones.

The leaders among ores and concentrates imported in Ukraine are aluminum ores (some 60% in gross volume), manganese ores (24-26%), and nickel ores (around 13%). Also the domestic market needs chromium ores and concentrates, titanium, molybdenum, zirconium, copper, cobalt, and vanadium ores and concentrates.

Table 1. Export of ores and concentrates from Ukraine

Table 2. Import of ores and concentrates to Ukraine

Aluminum industry

The aluminum industry is one of the key segments of non-ferrous metallurgy in Ukraine. The output of aluminum and its alloys now exceeds 270 ths. tons.

Although Ukraine has several dozens of companies producing secondary aluminum alloys and are involved in scrap processing of aluminum and its alloys, the cornerstone of the country’s aluminum industry includes only three enterprises, namely, Nikolayev Alumina Plant OJSC (NGZ), Zaporozhye Production Aluminum Works OJSC (ZAlK), and Intersplav JV.

The first two enterprises belong to top Russian aluminum producers – Rusal and SUAL, and the third company is a joint asset of Spanish and Ukrainian investors.

Nikolayev Alumina Plant OJSC is the largest CIS producer of alumina, which is the key raw for aluminum production. In 2005, the plant’s output was around 1.36 mn tons of alumina, which is 4.5% more than in 2004.

The blocks of ZAlK were designed for the production of 110 ths. tons of primary aluminum and primary alloys based on aluminum. The enterprise also makes alumina used mostly for in-house purposes. According to preliminary data, in 2005 the works used its aluminum production facilities at almost 100% of capacity and produced around 265 ths. tons of alumina.

Intersplav JV is the main Ukrainian producer of aluminum alloys, capable of producing up to 80 ths. tons of primary and secondary aluminum alloys per year. However, because of the shortage of raw stock and some other economic determinants, the company’s facilities have been recently used at 50-80%.

Other notable manufacturers of finished products are JV CJSC Donetsk Plant of Aluminum Profiles and Collective Enterprise Kiev Plant of Aluminum Constructions, which produce aluminum profiles and metal structures.

The basis of secondary metallurgy in the aluminum segment consists of the following enterprises: ExpoMetal CJSC, Zaporozhye Plant of Non-Ferrous Alloys LLC, Mechanical Plant LLC, UkrSpetsMet LLC, KonturMet LLC, Obimet JV LLC, Donmet JV LLC, InterMet LLC, AlMet LLC, and AutroMat LLC.

Copper industry

OJSC Artemovsk Plant of Non-Ferrous Metals Processing (AZOTsM) is certainly the flagship of Ukraine’s copper industry. It is the only Ukrainian producer of flat and round rolled copper and its alloys. The plant is capable to produce copper, brass, copper-and-nickel rolled products and semis.

In 2005, AZOTsM production is estimated at over 41 ths. tons of finished products, and it is the major contribution to gross copper production in the country, which makes 65-75 ths. tons of products of copper and its alloys per annum. Around 80-85% of the plant’s output is supplied to the domestic market, as opposed to the rest of enterprises in the segment, which mostly have an export orientation.

These smaller companies include Catech-Electro LLC – one of the main producers of cable products in Ukraine, Pankom-Yun JV LLC (the company launched production of cathode copper), DonetskVtorMet (Donetsk Secondary Metals) Subsidiary Enterprise, Zaporozhye Plant of Non-Ferrous Alloys LLC, VtorMet (Secondary Metals) CJSC, TechnoScrap JV, EcoMetal LLC, and Bona LLC.

Lead industry

Ukraine produces some 50-60 ths. tons of lead presently. The largest Ukrainian producer of this metal and its alloys is Svinets (Lead) CJSC, whose annual production is now exceeding 10 ths. tons of lead and its alloys.

Consumers of the company’s output are mostly storage battery and cable plants of the CIS, in particular, the largest Ukrainian producer of storage battery articles – ISTA National JSC. Some of the volume of lead products is shipped to the Baltic States and Western Europe. Besides Svinets CJSC, other producers of lead articles in Ukraine are UkrSplav (Ukrainian Alloy) LLC, Megatex OJSC, EnergoSplav (Energy Alloy) Scientific and Production Enterprise LLC, as well as VladarMet LLC.

Titanium industry

The titanium industry is the only segment of Ukraine’s non-ferrous metallurgy which has complete production cycle starting from the extraction of titaniferous ores and ending with titanium dioxide production.

The Zaporozhye Titanium and Magnesium Works (ZTMK) state enterprise is the only Ukrainian producer of metallic spongy titanium. Despite an annual production capacity of 20 ths. tons of titanium sponge, the works is presently making only 8 ths. tons of the article. At its own facilities, the works processes part of the output into semi products - titanium ingots, the rest (90-95%) is supplied to other enterprises – mostly, abroad.

Other Ukrainian producers of titanium semis are Antares LLC, Titan Scientific and Production Center, FIKO JSC, and Zakarpatye Metallurgical Plant. Most of them produce ingots of titanium and its alloys both from sponge and titanium scrap and wastes.

Ukraine has no rolling facilities to process titanium semis, therefore, almost the entire volume of this product is headed overseas. At present, the possibility to launch pilot production of rolled titanium at some Ukrainian enterprises that have rolling capacities is being considered.

Ukrainian export of non-ferrous metals

Compared to 2004, the estimated volume of non-ferrous metals export from Ukraine in 2005 dropped by 3.5% down to 242.7 ths. tons. Currency earnings from the exports in 2005 totaled USD 616.9 mn, which is 19.5% lower than in 2004. The corresponding figures of 2004 were 251.4 ths. tons and USD 766.2 mn.

The most valuable articles in Ukraine’s shipments of non-ferrous metals are the aluminum and copper groups, which account in aggregate 90.4% in the exports of 2005, whereas currency earnings from these groups’ shipments contributed only 78.8% to the gross figure of non-ferrous metal export.

Primary aluminum and aluminum ingot alloys are the key articles in aluminum group shipments and account for 90.3% and 81.7% respectively in aggregate financial proceeds from aluminum group exports.

The articles dominating Ukraine’s export of copper were flat and round rolled products, as well as semis.

Export supplies of nickel, lead, zinc, and tin were not so notable. Their gross portion in non-ferrous metals export made correspondingly 5.6% and 2.9% of total physical exports and the volume of currency proceeds.

Ukrainian import of non-ferrous metals

According to preliminary data, the physical volume of imported non-ferrous metal products in 2005 grew by almost 27%, while their financial value added 31.2%. The gross volume of non-ferrous metals imported into the country in this period amounted to 171.4 ths. tons worth USD 562.2 mn. The figures of non-ferrous metals import in 2004 made respectively 135 ths. tons and USD 428.5 mn.

Particular growth tempos were seen in the supplies of lead (333% and 427%), copper products (29.7% and 50.2%), and aluminum articles (28% and 25.4%). At the same time, the volumes of metal products imported from the nickel and zinc groups fell by 5.7% and 7.8% correspondingly, while the general figures of tin import to Ukraine dropped by 12.7% (physical terms) and 19% (import value).

The groups that lead the way in Ukraine’s import of non-ferrous metals are aluminum, copper, and zinc groups, which account for joint 80.3% in gross physical volume of imports and 73.3% in total expenditures for non-ferrous metals import to the country.

Table 3. Export of non-ferrous metals from Ukraine

Table 4. Import of non-ferrous metals to Ukraine

Table 5. Export of aluminum from Ukraine

Table 6. Import of aluminum to Ukraine (staple imports)

Table 7. Export of copper from Ukraine (staple exports)

Table 8. Import of copper to Ukraine (staple imports)

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