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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Cement Wars: Strategies and Tactics A highly profitable industrial sector could fall victim

13 November, 2012 - 00:00

The most widespread disease in Mykolaiv currently is silicosis, and wage arrears along with the cement workers’ hunger aggravates it. The plant and the city await investment, but the problem is how to survive...

Two years ago the Hradobank and Khorda Companies respectively purchased correspondingly 11% and 30% of Mykolaiv Cement Plant (Lviv oblast) stock. Under other conditions this anniversary would not have attracted much attention. But since then neither company invested a single hryvnia in the plant in spite of their official investment obligations. Now after two years they have the right to sell their shares’ packages at whatever price they choose.

The new owner will have no investment obligations toward one of the most attractive enterprises in Ukrainian industry.

Of course, Hradobank and Khorda may keep their shares, but in such case the State Property Fund would be forced to revoke its agreement with them and levy them a hefty fine.

The plant’s public privatization control committee head Yaroslav Mukha is convinced that both firms originally purchased the stock intending to sell them to foreign buyers.

Transport corridors will be built in Europe widening the cement market, which could lead to the sector’s revival, which exacerbated the conflict over the plant’s privatization.

Lafarge intends to “become a worthy investment citizen of Ukraine, unless someone starts erecting obstacles to this,” said the firm’s Director for Business Development Strategy in Central and Eastern Europe Lilia Jolibois two weeks ago. Lafarge has purchased 28% of the plant’s stock and promises to pay off wage arrears as soon as the purchase is registered. They also promise $7 million in immediate investment and a long-term investment project totaling $150 million. The European Bank for Reconstruction and Development is one of Lafarge’s fellow investors, which makes its position more solid.

Meanwhile, experts have a certain suspicion toward the French company. The company is rumored to have an intent to monopolize the Ukrainian cement industry and forcing the closure of their competitors. It is possible that Ukrainian competitors started such rumors. And the state should not discriminate between local and foreign firms but choose a company which can pay and produce.

There is another version for the resistance Lafarge that is facing in Ukraine. The French company intends to convert from natural gas to cheaper fuels and the gas magnates are not pleased.

There are many questions to the SPF connected with the privatization of the Mykolaiv Cement Plant, for their Fund was so credulous as to alienate Ukrainian property without any guarantee investment obligations would be fulfilled.

 

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