1 Nov 2023 09:48

Second Ukrainian manganese ore producer suspends operations

MOSCOW. Nov 1 (Interfax) - Pokrovsky GOK (PGOK), one of Ukraine's largest manganese ore producers, has suspended operations.

"There have been many rumors around our mine and plant recently that are not true [...] Pokrovsky GOK is not closing, it's suspending mining of ore and production of concentrate to build up supplies and carry out repair work," Ukrainian media reported the company's press service as saying.

PGOK said it is doing "some reorganization of work with the engagement of the maximum number of people to guard the company's facilities and, accordingly, carry out repair work, transport and deliveries using equipment."

PGOK's whole management team is working, the owners of the company have not changed and "management has no information about a sale or any measures in this direction," the press service said.

Commenting on reports that PGOK's equipment is being dismantled and sold off

CEO Sergei Shuvayev said that "amid the absence of sales of commercial product, [PGOK] needs to use all available means for additional income."

"When the enterprise is working at full capacity, very often there aren't enough resources for such work. Now we have both the personnel and equipment for this. There are quite a lot of written-off capital assets that have not been dismantled and delivered to storage - for example, scrap metal that we can't sort out and sell when we're working full time. So now we'll prepare and ship it," Shuvayev said.

He also said materials and supplies that were never needed in production have been piling up in PGOK's warehouses for years, but now the company has done an "in-depth analysis" of this inventory and the "relevant services are looking for ways to sell" it.

He also said the ferroalloys market is in a downturn. "For a full understanding of the picture I want to stress that the dynamic of our concentrate sales is as follows: in 2021 sales of finished product exceeded 1 million tonnes. Already last year this figure fell by almost two thirds and this year by half again," Shuvayev said.

For example, the production cost of silicon manganese, the finished product of PGOK customer Nikopol Ferroalloy Plant (NZF), is two times higher than its price in Europe and other markets. Electricity, which is currently expensive, accounts for 60% of the production cost of ferroalloys.

"We've already lived through such a situation, and more than once. Unfortunately, it has happened again," Shuvayev said.

PGOK partially resumed production in April after sitting idle since December 1, 2022. Its processing plant had been idle, not producing concentrate since October 1, 2022.

Marganetsky GOK, another major Ukrainian manganese ore producer, suspended ore mining and processing in October 2023.