Recently, with a sense of fulfilled duty to the Ukrainian state and its people, Denis Shmygal, the Prime Minister of Ukraine, announced that the Cabinet of Ministers had decided to privatize one of the largest producers of titanium raw materials in the world, the United Mining and Chemical Company (UMCC).
As a result, 100% of the shares were sold for 4 billion hryvnia to Azerbaijani businessman Nasib Hasanov, the only participant in the auction.
This sensitive titanium topic was the subject of my article “On titanium bullrogs and the state Think Tank,” which was published on March 14, 2015 on the pages of Ukrayinska Pravda.
I will quote a few fragments from what was written:
“In 1957, the USSR, thanks to the developments of German specialists, launched into orbit the first artificial Earth satellite, in which carefully tested titanium alloys were used. A year before this event, in June 1956, the production of Ukrainian titanium was started in Zaporozhye and the State Research and Design Institute of Titanium was founded - today the State Research and Design Institute of Titanium - and a research complex was deployed in Ukraine to develop application technologies titanium in the aviation, aerospace, shipbuilding and chemical industries. There were personnel and resource prerequisites for this, and raw material reserves still account for 20% of the world's reserves.
An important role in this process was played by the Paton Institute of Electric Welding of the Academy of Sciences of the Ukrainian SSR and the Mariupol branch of the Leningrad Central Research Institute of Structural Materials “Prometheus”. Now the Mariupol branch has been transformed into the Ukrainian Research Institute of Structural Materials “Prometheus”.
The Alchevsk Metallurgical Plant began production of rolled sheets, a special titanium profile was produced in Yenakievo, and the Nikopol South Pipe Plant mastered unique technologies for the production of titanium pipes.
After the collapse of the USSR, Ukraine occupied an excellent position in the world market in the titanium rolled sector. The economic outlook was rosy: the market price of pure titanium is 35 times higher than the price of popular steel alloys, and the price of rolled titanium sheet is about 5 times higher than the cost of titanium sponge, which Ukraine trades en gros.
Now Ukraine should be the leader in the titanium market. But in reality?
From the “News” on the ZTMC website dated February 2, 2015, we learn that “Zaporozhye Titanium-Magnesium Plant LLC, part of the titanium business of Group DF, during 2014 increased the production of products of deeper processing - titanium ingots - to 207 tons, this is 3 times more than the previous year.”
Even if a miracle happens and sheet metal is produced from these ingots at the Alchevsk plant, the volume of Ukrainian products in 2014 in currency equivalent will reach as much as 6,468,750 euros.
Why isn't it "progress"? Is it really possible that in a country where one of the leaders was a rocket scientist, they did not know about the place and role of titanium and related industries among the country’s strategic priorities?
From the largest chemical concerns in Germany, the president’s “rocket production” circle constantly received requests for supplies of rolled titanium. Other Ukrainian leaders also knew about titanium priorities.
They also knew that the production of titanium at a high level of processing is an extremely attractive market sector with ultra-high added value. But…
All Ukrainian leaders belonged/belong to a classic transnational group, known to the general public as the nomenklatura. Basically, an ordinary nomenclature officer acts like a frog sitting on the river bank and hunting for insects.
The frog does not show any initiative, sits motionless and grabs only the insect that falls into its field of vision, within the reach of its grasping movement. This can be verified by a simple experiment: when you bring a straw close to a frog’s mouth, the frog will certainly grab it, and will not let go even if you lift the frog into the air - a complete analogy with the nomenklatura, who are also extremely reluctant to leave what they grabbed.
As rightly noted in the article by Dmitry Starokadomsky, the vigorous activity of those in power to “restructure”, “nationalize”, “corporatize” the titanium industry, etc. came down to a trivial “redistribution of property.”
Very often in favor of one of the Russian monopolists.
But domestic frog nomenklatura forgot that there is also a breed of ultra-predatory frogs, which, by analogy with the bulldog, the Anglo-Saxons call “bulfrog”. But this time we are not talking about the inhabitants of the Amazonian floodplains from the Rhinella subspecies, but about the Kremlin “bulfrogs”.
This time their leader wanted to seize not just an industry, albeit the most attractive one in the world, but the whole of Ukraine. Along with her "frogs". Today, part of this plan has been implemented, and the “Kremlfrog” already controls Crimea and part of the Donbass, as well as some “capital managers” and “subsoil lords.”
We have a very delicate situation, typical not only for the production of titanium at a high level of processing. Yes, the industry’s production and partially research facilities are located in one, seemingly Ukrainian, private structure, but such an important component as the “Crimean Titan” remains territorially under Putin’s control.
A production facility capable of producing the basic market product—titanium sheets—is located in Alchevsk, whose status is now very precarious.
The position of the Donetsk Chemical-Technological Factory, located in the town of Donskoy near Volnovakha, is no less sensitive. Its unique furnaces, an important component in the smelting of titanium ingots, are now mothballed.
The question arises: how will these enterprises be managed in practice? After all, the eventual commercial and technological secrets that will reach the Crimean Titan or the Alchevsk Metallurgical Plant from sister enterprises in “mainland” Ukraine will no longer be secrets to anyone.
We emphasize: Ukraine has the largest titanium deposits in Europe and owns a fifth of the world's titanium ore reserves. This is an extremely important raw material for the production of aerospace products, medicines, and paints.
By joining the free trade zone with the EU, Ukraine receives a unique opportunity to supply titanium products for high-tech industries around the world.
In the next five years, the development of the titanium industry in Ukraine will require, according to economists, about two and a half billion dollars. And this is nothing more than a kind of locomotive of the Ukrainian economy.
But. Since 2004, the Irshansky and Volnogorsky mining and processing plants, specializing in the extraction and processing of ilmenite titanium ore, have been leased from the Crimean Titan Private Joint Stock Company (Armensk), associated with Dmitry Firtash...”
As stated, this article is dated March 2015. Less than ten years later, in October 2024, one of the largest producers of titanium raw materials in the world, the United Mining and Chemical Company (UMCC), was privatized.
Before our eyes, a strategic industry in Ukraine is being drained. The final beneficiaries of the deal sit in the Kremlin, acting unhindered through the Azerbaijani interconnection.
What's at stake politically? The sale of Ukrainian titanium to an Azerbaijani entrepreneur with a rather dubious reputation is an event essentially on the same scale as Ukraine’s refusal of nuclear potential, strategic missiles, and bombers in the early 90s.
The trusting relationship between Ilham Aliyev and Putin is an open secret. Food for thought:
Two days before the start of the full-scale Russian invasion of Ukraine, the “Declaration on Allied Cooperation between the Republic of Azerbaijan and the Russian Federation” was signed in the Kremlin;
On May 25, 2023, President of Azerbaijan Ilham Aliyev, at the invitation of Vladimir Putin, took part in a meeting of the Supreme Eurasian Economic Council. Putin thanked Aliyev for participating in the meeting and emphasized that Azerbaijan’s relations with the member countries of the organization are constantly growing and are important for each country of the organization;
“The provisions of the Declaration on Allied Cooperation, signed in February 2022, are being successfully implemented. Our countries act as allies, as friends, as close partners and neighbors” (from Putin’s report during his stay in Baku on August 19, 2024);
“There are many good interesting projects both in the energy sector and in the field of infrastructure development. All projects, both bilateral and unilateral, are promising, real and living” (from Putin’s speech during a meeting with Aliyev on the sidelines of the CIS summit on October 8, 2024).
In 2016, Mossack Fonseca & Co, a law firm headquartered in Panama, became the subject of a high-profile international scandal due to the leak of confidential information about the assets and property of many politicians. In particular, Ilham Aliyev and his business partner Nasib Hasanov. It has become known that the family of the President of Azerbaijan controls part of the country’s richest deposits of gold, copper and silver and London real estate through a network of offshore companies registered in Panama. In Azerbaijan, Nasib Hasanov is considered a figure controlled by Beylar Ayubov, the head of Ilham Aliyev’s security.
Mikhail Gonchar, president of the Center for Global Studies “Strategy XXI”, reported an interesting detail:
“Few people know about this person (Nasib Hasanov - A.R.), but he is considered the “supervising owner” of Azerbaijan’s assets outside its borders. He works in tandem with Beylar Eyyubov, the head of the presidential security - a sort of Azerbaijani version of a silogarchy: an alliance between a security official and an oligarch. It is significant that when Heydar Aliyev, the father of the current uncrowned monarch of Azerbaijan, passed away, on the night of August 1-2, 2003, in the ward, in addition to his son Ilham, were present the head of the presidential administration Ramiz Mehdiyev and the head of the president’s personal security Beylar Eyubov, who made a consensus decision to appoint Aliyev Jr. as prime minister.”
By the way, Nasib Hasanov is the beneficiary of 100% of the second largest Ukrainian mobile operator Vodafone Ukraine.
“So, the Ukrainian titan falls under the control of a quasi-mafia group originating from a (un)friendly country. Formally, of course, Azerbaijan is considered a friendly country, even in the “Foreign Policy Strategy” it is indicated as a strategic partner. Of course! Provides humanitarian assistance, advocates territorial integrity, congratulates on Independence Day, etc... But in fact, Azerbaijan is already in the camp unfriendly to Ukraine. If we take into account that the key roles in this camp are played by Russia and China, with which Baku is already linked by relations of alliance and strategic partnership, then Azerbaijan is on the side of the enemy. Its foreign policy vectors are clear and unambiguous - SCO, BRICS, EAEU" (Mikhail Gonchar).
Before every serious business transaction, large companies weigh all the risks: they carefully collect information about the potential partner, about the subject of purchase and sale, and strive to better understand what they can gain and what they can lose. This procedure is called “due diligence” - a standard set of analytical and operational measures aimed at comprehensively verifying the legality and commercial attractiveness of a transaction, selling a business and attracting investments in order to avoid or minimize existing/possible entrepreneurial, political, legal , tax, marketing risks.
Did the Ukrainian side (SVR, SBU, counterintelligence in particular) conduct due diligence on the titanium deal and warn the Cabinet of Ministers about the inadmissibility of privatization of the UMCC?
As a manufacturer of the final titanium product, Azerbaijan is unknown on the market. It serves as a banal business pad for the leading titanium manufacturers - Russia and China. They will not have to look for workarounds or make complex maneuvers to supply ore to Russia. She will go directly. This could significantly affect the rocket and aircraft manufacturing industries of the West.
According to Mikhail Gonchar, after the privatization of the United Mining and Chemical Company, “a new supply chain of Ukrainian titanium raw materials will be formed for the enemy, that is, for the leading holding of the Russian military-industrial complex Rostec, which produces all that deadly machinery that flies to Ukrainian cities, industrial infrastructure and positions of the Ukrainian Defense Forces."
Let us remind you: in Russian rockets, the engine blades are made of titanium ore mined in Ukraine. How can you give such weapons to your enemy?
Azerbaijan recently applied to join BRICS, an international organization of the largest developing countries in terms of area and population. China and Russia play the main roles in it. No comments.
The main producers of titanium concentrate on the planet are Australia, the USA, Norway and Ukraine. The whole world needs “golden” Ukrainian titanium sands. Therefore, Ukraine could turn into a state capable of influencing global world processes. In particular, to strengthen the military potential of the West. On the other hand, ownership of such a rare natural resource would increase political and economic support for Ukraine by Western states.
It seems that the Ukrainian special services believed the assurances of Prime Minister Shmygal as if there was no alternative: “The privatization of state-owned enterprises is an important element in the development of our economy and increasing investment. This is also transparency and reducing corruption risks, which is a systemic policy.”
Two decades ago, Doctor of Physics and Mathematics Leonid Shulman deeply studied the problem of market fundamentalism. In his publications, he constantly emphasized that adherents of an unregulated market economy incessantly repeat that the state is the worst owner and an extremely ineffective manager, that the state is a conservative, corrupt bureaucratic apparatus not interested in the results of production. Therefore, it is necessary to sell state-owned enterprises to private owners as quickly as possible so that they can restore order. The scientist showed that it is impossible to do this indiscriminately. Because there is a risk of organizing a criminal privatization scheme. Namely:
A bribe to the director of an enterprise and, if necessary, his superiors for bringing the enterprise to bankruptcy.
A bribe to officials who will provide pre-privatization preparation, that is, separate the social sphere and other non-profit structures from the enterprise.
A bribe to “independent” experts who will determine the undervalued price of the enterprise.
A bribe to officials for putting an almost bankrupt enterprise up for auction with a reduced initial price.
Staging an auction (selection of “competitors” and “open” bidding scenario).
Acquisition of a company for a ridiculous price.
Doesn't remind you of anything? So here it is.
In conclusion, another self-citation from March 14, 2015:
“How will the imperatives of the defense doctrine of the Ukrainian state be consistent with the openly non-state monopolization of entire industrial sectors of Ukraine?
What position does the Antimonopoly Committee take on this issue?
How can you use the creative energy of a huge but scattered team of specialists throughout Ukraine to bring the industry to its rightful place in the global market of high-tech titanium products?
Could something similar happen in Britain during World War II? The Government of His Majesty King George VI passed the Emergency Powers (Defense) Act back in August 1939. According to this document, the government essentially received dictatorial powers.”
Now the process of buying and selling Ukrainian titanium seems to be incomplete. The last dot on the “i” has not yet been placed. However, if this anti-state deal does happen, then our descendants will curse those who decided to take such a “privatization” step. For Ukraine in the near future, it may entail not only economic losses.
