The head of the State Property Fund believes that Zaporizhzhia Aluminum will become an industrial park

The head of the State Property Fund, Vitalii Koval, believes that the Zaporizhzhia Aluminum Plant is of interest to potential investors primarily as a site for the creation of an industrial park.

Vitalii Koval said this in an interview for the publication LIGA.net, NikVesti writes.

As you know, after three unsuccessful attempts, the State Property Fund canceled the auction for the sale of the Zaporizhzhia Aluminum Plant (ZAP).

«ZAP is certainly of interest to potential investors. Especially as a brownfield site with developed infrastructure. This opens up opportunities for the creation of new industries, which will contribute to the economic development of the region,» said Vitalii Koval.

At the same time, he also does not rule out that aluminum production will be resumed there, which requires large investments.

«The restoration of aluminum production, although it requires significant investments, is also quite real. The presence of security zones, access infrastructure and infrastructure for supplying electricity creates favorable conditions for this. The key success factor will be the attraction of a pro-Ukrainian investor ready to invest funds and efforts in the revival of the enterprise,» said Vitalii Koval.

In addition, the enterprise needs to be provided with raw materials, and for this the Mykolaiv Alumina Plant must resume its work.

Read also the article NikVesti: Trapped in stagnation: what are the chances of the Mykolaiv Alumina Plant after nationalization

«It is clear that a stable raw material base is necessary for the full recovery of aluminum production. This involves the creation of vertically integrated supply chains, including the restoration of the Mykolaiv Alumina Plant (MAP) and ensuring the supply of bauxite from Ukrainian mines. The nationalized plant is managed by the State Property Fund. We maintain its working condition. Now its activities are suspended due to the blockade of Mykolaiv seaports and the risks of shelling. These circumstances make it impossible for it to function fully now,» Vitalii Koval said.

What you need to know about the Zaporizhzhia Aluminum Plant

The Zaporizhzhia Aluminum Plant, once Ukraine's only producer of primary aluminum, is now in dire financial straits due to Russian investments. Currently, its debt is 6.44 billion hryvnias.

After the return of state control over the plant, a decision was made to privatize it. The plant remains a significant industrial asset with 1,497 properties on an area of over 370,000 m², located on 25 plots of land. The assets also include 291 units of transport and special equipment.

The privatization of ZAP opens up prospects for a large-scale business project and can stimulate the economic development of the region, especially in the conditions of the post-war recovery of Ukraine, where such objects can significantly contribute to the strengthening of the national economy.

The new owner undertakes within 18 months to repay debts from wages and to the budget, as well as to keep employees for six months.

In 2001, AvtoVaz-Invest acquired 68% of ZAP shares. In 2006, the new owner of this asset became Velbay Holdings Limited, controlled by Russian Aluminum (RUSAL) of Russian businessman Oleh Derypaska. In addition to this package of shares, he managed to purchase another 29.5% of the plant's shares. Thus, Derypaska gained control over 97.5% of ZAP shares. In 2015, the state returned 68% of the shares to its ownership through the court and transferred them to the management of the State Property Fund. The remaining shares (29.5%) in February 2023 were seized by the Supreme Anti-Corruption Court as state revenue at the request of the Ministry of Justice.

As of May 31, 2023, part of the company's real estate, with a total area of 6,755.6 square meters, was leased in accordance with eight contracts valid until September 1, 2065. In total, the company's balance sheet also includes 18 state-owned objects.

Today, the State Property Fund of Ukraine owns 97.5% of ZALK shares. In the last three years, the plant suffered significant losses: in 2020 — ₴49.7 million, in 2021 — ₴36.8 million, and in 2022 — ₴59.3 million.