- May Rains Set the Stage for Good Crops
- Double Digit Growth for Sunflower Oil, Poultry, and Eggs
- Germans, Danes Plan Pig Farms
- Norwegian Investor Successfully Exits Farm Investment, Now Looks for More
- Biggest Trucks In Ukraine Haul Iron Ore in Kryvyi Rih
- Iron Exports Up
- Canadian Iron Mine Progresses
- Russia and Ukraine Gird for Gas Transit Talks in May
- Regional Airports Revive
- French to Supply Water Purification to Mariupol
- Solar, Wind: Rada Votes to Move from Europe’s Highest Tariffs to Auctions
- Investments Make Renewables Ukraine’s Fast Growing Energy Segment
- Taking Move to Auctions in Stride, Investors plan Billions in New Solar Investments Through 2020
With rain forecast across Ukraine for the next week, farmers are happy. Early spring grain was completed on 2.1 million hectares – 10% more than last year. This is 94% of the planned area, reports the Agrarian Policy and Food Ministry.
Moisture in the soil may put Ukraine on track to match last year’s record grain harvest of 70 million tons. In neighboring Russia, similar weather could boost the grain crop by as much as 14%, to 129 million tons, reports Reuters in a story headlined: “Good Weather Puts Russia, Ukraine on Track for Large Grain Crop.” Kazakhstan, the region’s other big producer, expects to match last year’s harvest of 20 million tons.
With two months left in the grain marketing year, farmers have exported 41 million tons – topping the 40 million tons exported during all of the previous marketing year. Ukraine has exported: 23 million tons of corn, 14 million tons of wheat, and 3.3 million tons of barley. Underlining Ukraine’s role as a world food power, total grain exports could hit 50 million tons this year.
Despite farmers complaining about rail tariffs, the amount of grain moved by freight trains increased by 7% during the first quarter, to 28.6 million tons of grain. Over the last decade, Ukrzaliznytsia has doubled its grain volumes, from 15.5 million tons in 2008 to 33 million tons last year, Andrey Ryazantsev, the state railroad’s financial director, tells the Center for Transportation Strategies.
Sunflower oil production was up by 14%, to 1.5 million tons, during the first quarter, compared to last year’s in January-March period. In March alone, sunflower oil production jumped to 23% y-o-y, to 527,000 tons, reports that State Statistics Service. Ukraine is the world’s largest exporter, with India the top buyer of the cooking oil. In 2018, production dropped by 8% y-o-y, to 4.8 million tons.
Kernel, Ukraine’s largest sunflower oil producer, saw its oil sales jump by 40%, to 389,600 tons in the first quarter, compared to January-March last year. Behind the jump, Kernel’s numbers underline Ukraine’s slow progress in creating a sunflower oil brand and selling oil in bottles– a higher value export. Kernel’s bulk sales were 11 times greater than its bottle sales – 32,000 tons. During the first quarter, bulk sales grew by 41%. Bottle sales lagged, growing by 30%.
Low sugar prices and rising production costs are prompting sugar producers to cut plantings of sugar beets this spring by about one quarter, to 210,000 hectares, the lowest level in five years, reports Ukrtsukor, the sugar producer association. During the first half of the sugar marketing year, sugar exports were down by 10% to 304,000 tons, the association reports. During the last sugar refining season, sugar production was down by 15% to 1.7 million tons.
At Astarta, Ukraine’s largest sugar producer, sugar sales dropped by 42% y-o-y during the first quarter. Sugar prices were down by 15%. By shifting land last year to corn, wheat, barley and sunflower, Astarta’s revenue increased by about 21% to to €110 million, calculates Concorde Capital analyst Alexander Paraschiy.
Ukraine’s fruits and nuts export revenues rose by 22%, to $25 million, during the first two months of this year, compared to January-Febuary period of last year. February’s exports of $25 million were double the level of two years ago, according to EastFruit information and analytical platform.
Pig Progress news site reports that Danish and German companies are planning to launch pig farms in Ukraine, despite outbreaks of African swine flu. The site’s ‘World of Pigs’ feature reports that Danish company Agro East is building a farm in Zhytomyr with a capacity for 25,000 pigs. In Lviv region, two farms, for a total of 10,000 pigs, are planned by German pig producers Poels Mastschweine and Tierproduktion Alkersleben. In Ivano-Frankivsk region, Goodvalley Ukraine, another Danish company, plans to invest €4 million to build a meat processing plant.
Two new cases of African swine fever – one in Ternopil and one in Chernivtsi – were reported Thursday by the State Service for Food Safety and Consumer Protection. Since 2015, about 400 outbreaks involving dozens of farm have been reported. Last year, 145 cases reported in Ukraine of the virus which is fatal to pigs. If infections continue to spread, Ukraine will lose 1.2 million pigs, or $150 million, by 2020, predicts the Food Safety agency.
After spending almost $250 million to buy a poultry producer in Slovenia, MHP, Ukraine’s largest poultry producer, plans to continue to buy producers in the EU and to expand to the Middle East and Africa, according to a statement posted on the Warsaw Stock Exchange website. At home, MHP is investing to increase its production capacity in Vinnytsia by one third, to 840,000 tons in 2022. Between now and 2022, MHP plans to spend $420 on foreign purchases and increasing domestic production.
With little room for sales growth at home, MHP plans to expand exports this year by 15%, to 330,000 tons, Victoria Kapelyushnaya, MHP chief financial officer, tells GlobalMeatNews. During the first quarter, poultry volume sales totaled 164,000, up 21% y-o-y. Exports were 93,000 up 47% y-o-y to 57% of total sales. Concorde Capital’s Andriy Perederey writes: “The company’s key EBITDA driver in 2019 will be a rise in poultry export volumes.”
Ovostar Union, a top manufacturer of eggs and egg products in Ukraine, opened a subsidiary in Dubai and spent $3.3 million to buy two Kyiv region companies last year, the group reported in its annual financial report. Last year, sales destinations were: Ukraine – 55%; Middle East – 26%, EU – 16%, and other countries – 3%. Last year, export revenue increased by 17% to $56 million.
This year, Ovostar, plans to increase laying hens by 13%, to 7.9 million head, and to increase egg production by 14%, or 1.8 billion eggs. List as OVO on the Warsaw Stock Exchange, Ovostars reports are scrutinised closely by analysts in Kyiv. Calculating that the company first quarter revenue was $30 million, or a 9% y-o-y decrease, Concorde Capital’s Androy Perederey writes: “We are keeping our neutral view on Ovostar stock.”
A Norwegian company partly owned by the Norwegian government sold its 3,000-hectare farm in Sumy region last week for an undisclosed price. “The results of the investment were impressive; now we are looking forward to additional opportunities to invest in Ukraine,” said Hans Christian Dall Nygard, regional advisor to Norways State Investment Fund, an investor in the farm. Andrew Kinsel, an American lawyer who advised on the deal, said: “Farm property sale is common, land rental agreements are signed with a corporate entity, and the corporate entity is sold. Land itself is (usually) not sold, only rental agreements.” Even without a private farm land market, he said: “There is strong demand in the farming sector. I see that buyers are quite active through the planting and elections season.”
The Ukrainian Agro-Industrial & Food Forum, the largest such conference outside of Ukraine, will take place May 28 in Rotterdam. Expected to draw executives from 150 agribusiness companies, the forum unites two of the world’s leading exporters and innovators of agri-food products – the Netherlands and Ukraine. Now in its second year, the forum will focus on trade, logistics and infrastructure, financing, ag tech, export markets, trade and investment, and promotion of the value chain.
The biggest trucks in Ukraine now haul iron ore Metinvest’s Northern Iron Ore Dressing Works in Kryvyi Rih. The $2 million BelAz dump trucks can carry loads of almost 300 tons of rock at the quarries, part of one of Europe’s largest iron ore mining enterprises. This year, Metinvest is buying 16 of these monster trucks. Until these purchases, the biggest dump trucks in Ukraine could carry 220 tons. BelAz says that Ukrainian mining companies use 2,000 BelAZ trucks, accounting for 90% of the oversized dumptrucks in the nation.
ArcelorMittal Kryvyi Rih, Ukraine’s largest integrated steel company, plans to increase iron ore concentrate output by 10.5% this year, to 10.3 million tons. This would be a 23% increase over the 2017 level. To reach this level, the company is increasing its investments in mining trucks and bulldozers this year by 46%, to $7 million.
Alexander Yaroslavsky plans to invest $150-200 million over the next five years in two properties he bought since 2017 – Sucha Balka, an iron mine in Kryvyi Rih, and Dnipro Metallurgical Plant, a steel plant in Dnipro. At the iron mine, the Kharkiv-based businessman plans to buy new equipment, mine reserves at deeper levels, and build a processing plant. At the steel plant, he plans to build a continuous casting plant.
In March, Ukraine’s ports handled 30.4% more iron ore than in the same period last year – more than double the 12.6% growth recorded for all freight, reports the Sea Ports Administration.
Toronto-based Black Iron (TSX: BKI) has raised almost US$1.2 million in a private placement on the heels of a March land agreement with Ukraine’s Defense Ministry. Under the deal, the Canadian mining company will compensate the Defense Ministry for taking over a troop training area to build an ore processing and tailings site for its Shymanivske iron ore project in Kryvyi Rih. According to Black Iron, the deposit has 646 millon tons measured and indicated resource, at 31.6% iron.
Concorde Capital’s Dmytro Khoroshun notes that in February, Glencore signed an MOU with Black Iron. Speculating that the Swiss-British mining and commodities giant might be the investor in the private placement, he writes: “This news is positive for both Black Iron and Ukraine’s image as an investment destination because it demonstrates the seriousness of foreign investors in projects such as Shymanivske.”
Some skilled miners working at Donetskstal now earn more than their counterparts in Poland and the Czech Republic, Ildar Saleev, company general director tells Channel 24. Competing with Central European mines for labor, he said Donetskstal is raising salaries by an average of 15% for the 10,000 workers at the company’s eight units. He said miner salaries in the Pokrovskoe mine are 76% higher than Ukraine’s average and 43% higher than the Donetsk region average. At present, the company has “hundreds of vacancies” for drivers, pipe fitters, welders and miners, with monthly salaries ranging from $370 to $1,300.
Due to repairs on Russia’s Yamal-Europe gas line, the volume of Russian gas shipped across Ukraine to the EU increased by 5.3% during the first quarter, to 20 billion cubic meters. In one week in April, shipment volumes jumped by 25%, to 300 million cubic meters a day. This flexibility makes Ukraine’s gas line system essential to Europe’s energy security in the 2020s, Naftogaz CEO Andriy Kobolyev writes on his Facebook page.
Ukraine and the EU plan to offer Gazprom a 10-year contract, with a guarantee of 60 billion cubic meters a year in transmission. “Ukraine will provide capacity at 90 billion cubic meters per year,” Yuriy Vitrenko, executive director of Naftogaz, briefed reporters last week. “Thirty billion cubic meters will be free capacity, which will be available for booking by other companies.” He calculates that at this level, Ukraine would keep its annual gas transit fees at the current level, $3 billion.
If Russia cuts off gas to Ukraine next year, Naftogaz plans to reverse flows in the main pipeline, allowing Slovakia to pump gas east to Ukraine, Vitrenko tells NV Business. To this end, workers are rebuilding a key compressor pipeline station in Bar, 70 km southwest of Vinnytsia city. To strengthen its negotiating position with Russia, Naftogaz plans to fill all reservoirs this summer, allowing Ukraine to get through the heating season of a normal winter. Ukraine has the largest gas storage capacity in Eastern Europe – 31 billion cubic meters.
In coming days, President Poroshenko is to sign into law the energy bill approved last week by the Rada, moving Ukraine next year from ‘green’ tariffs to ‘green’ auctions. Effective next year, the bill requires that all solar plants over 1 MW and all wind farms over 5MW participate in energy auctions. An existing 10% tariff increase for use of Ukrainian-made equipment is retained. The bill aims to establish a fair market price for ‘green’ electricity, to promote competition among producers, and to cut the cost of ‘green’ power to consumers, according to Sergey Savchuk, head of the State Energy Efficiency Agency.
The new legislation “corrects an error — the highest rates in Europe,” Igor Naslik, Energy and Coal Industry Minister, told the Rada. The goal is to cut news feed-in tariffs for solar plants by 25% next year, and by 2.5% a year from 2021 to 2023. For wind plants over 2 MW, the feed-in tariff is to go down next year by 10%. Biomass and biogas energy rates stay unchanged. Feed-in tariffs are prices paid to producers for selling into acommon electricity pool.
Renewable energy – largely solar and wind – will be the fastest growing energy source in Ukraine this year, predicts the Energy and Coal Industry Ministry. Renewables will more than double – increasing by 127% – to six gigawatts. Nuclear will decline by 1.2%, to 83.4 gigawatts. Thermal – coal and gas – will drop by 2% to 46.5 gigawatts. Combined heat and power plants will increase by 6.6% to 11.7 gigwatts. Large hydro will fall by 23% to eight gigawatts.
During the first quarter of this year, solar accounted for 80% of the 860 MW of newly installed renewable energy capacity, reports Savchuk, the Energy Efficiency director. Of Ukraine’s three gigawatts of installed renewable capacity, solar accounts for 71%.
Sky high ‘green tariffs’ boost the cost of power but generate little renewable electricity, Katya Gorchinskaya writes in a Politico article titled: “Ukraine’s Green Oligarchs.” Current rates paid producers, in euro cents per 100 kilowatt hours, are: solar – 15 to 16 cents; wind – 10.2 cents; small hydro 10 to 17 cents; thermal – 5.8 cents; nuclear 1.7 cents. As a result, renewables provided 1.9% of the nation’s electricity last year, but accounted for 8.6% of the nation’s €5.5 billion power bill.
Asserting that five years of subsidies were needed to jump start Ukraine’s renewable energy industry, DTEK, now Ukraine’s largest solar producer, tells Politico: “Investments in renewables have become the third most attractive sector for direct investments in Ukraine besides the agricultural and IT sector.” DTEK, owned by Rinat Akhmetov, adds: “As in other countries, the introduction of a specific regulatory framework was instrumental for DTEK’s and other investors’ decision to kickstart investments in this sector, and a precondition to attracting foreign long-term debts for the financing of the imported equipment required.”
Michael Yurkovich, CEO of TIU Canada, has two solar plants, totalling 24 MW, in southern Ukraine. Working on two more plants, in Odesa, for an additional 32 MW, he recently told Renewables Now: “Investors need confidence that there is an ongoing commitment to renewables; a consistent level of support during the investment cycle; a supportive regulatory and permitting environment; transparency in the distribution of support; and a level playing field for investors.”
Over $1 billion in solar projects are under construction this spring, racing the Dec. 31 sunset of the sky high green tariffs. Adjusting to a new auction regime, investors plan billions of dollars in additional investments through 2020. The investment action largely focuses on Ukraine’s three sunniest southern regions – Mykolaiv, Kherson and Odesa.
Here is a partial roundup:
In Mykolaiv, 400 MW of solar capacity is under construction or in the planning phase. Foreign investors nvestors include: Estonia Energy Invest, Turkey’s Eko Yenilenebiler Enerjiler AS, and Norway’s Scatec Solar. With EBRD financing, Scatec is building two Mykolaiv solar plants, investing a total of €232 million to build 197 MW capacity.
In Kherson, Scatec, through its Atlas Capital Energy LLC, is building this spring a 50 MW solar station in Hola Prystan. With about a dozen companies in Ukraine, Scatec is working on 414 MW of projects – 251 MW under construction and 163 in the design and permitting stage, reports Interfax-Ukraine.
The Arab Investment and Development Authority, AIDA, signed a deal in Dubai last month with STC Energy Ukraine to invest $2 billion in solar power plants in Ukraine. The first phase is to build solar plants totaling 170 MW, under the agreement signed by AIDA chair Adil Al Otaiba, STC Energy CEO Natalia Tykhonova, reports Emirates News Agency.
In Kirovohrad region, there are plans to commission 46 solar stations with a generating capacity of 500 MW by 2023, reports EcoTown news site. Almost half of this will come from three solar plants, totaling 190 MW, that DTEK plans to commission by the end of this year.
In Nikipol district of Dnipropetrovsk region, DTEK inaugurated earlier this month a 200 MW solar farm, the second largest in Europe. Now DTEK Renewables is building nearby a €200, 240MW solar polar plant, due for commissioning this year.
Companies from Belgium, Denmark, Ireland, Lithuania and Turkey are among the investors building about a dozen solar projects for over 100 MW in central Ukraine’s Zhytomyr region. Establishing the region’s reputation as solar friendly, the Zhytomyr Regional Administration signed 14 memorandums with solar investors last year.
Turkey’s Emsolt is building this spring 20 MW of solar capacity at two sites, in Zhytomyr and Khmelnitsky. The company has 85 MW ready for construction and another 50 MW under development, reports UNIAN.
Kness Group, the Vinnytsia-based engineering, procurement and construction firm, is building 500 MW of solar capacity across Ukraine this year. This adds to 500 MW in projects completed by the company in earlier years, Yevhen Didichenko, co-founder of Kness, told a recent renewable energy conference organized by GOLAW firm in Kyiv.
Two Japanese companies, Green Power Development Japan and Deloitte Touche Japan, are talking with the Energy and Coal Industry about building solar plants with a total capacity up to 1.2 GW in the Chornobyl exclusion zone, reports Interfax Ukraine. In addition to the symbolic value of building solar at the site of the 1986 nuclear disaster, solar developers want to plug into existing power transmission lines.
Odesa region now has 500 MW of installed solar capacity, including a 260 MW project commissioned in January. From Danube to the Mykolaiv border, Odesa now has 23 solar plants in the below 50 MW size. Spain’s Acciona Energia Global is seeking to win permission to buy majority control of two solar projects in Izmail owned by UDP Renewables of Vasyl Khmelnytsky.
With the spread of solar, southern Odesa increasingly faces the problem of excessive daytime power for local electricity grids. To address this, France’s RTE International and Ukrenergo are designing Ukraine’s first energy storage system. RTE International is a unit of RTE, the French electricity grid operator. The first phase of work is financed by a €560,000 grant from France’s Economy and Finance Ministry.
A “radical regional airports development program” is a key to Ukraine’s official plan to quadruple air passenger traffic to 80 million in 2030, reports Aviation Voice news site. To increase regional traffic from 25% today to 50% in 2030, the plan calls for investing €450 million to upgrade the airports of Kharkiv, Kherson, Lviv, Odesa and Zaporizhia to accommodate wide body jets. The airports of Bila Tserkva, Cherkasy, Chernivtsi, Dnipro, Ivano-Frankivsk, Kryvi Rih, Mariupol, Mykolaiv, Poltava, Rivne, Sumy, Ternopil, Uzhgorod and Vinnytsia would be upgraded to handle Boeing 737s and Airbus A320s.
Bolstered by the arrival of its seventh Boeing 737, SkyUp launches an ambitious summer schedule this week. From Kyiv Boryspil, Ukraine’s new low cost airline will start flights to: Alicante, Batumi, Bodrum, Burgas, Catania, Faro, Heraklion (Crete), Naples, Palma de Mallorca, Pula (Croatia), Odesa, Rimini, Split, Tenerife-South, Varna, and Yerevan. From Lviv, SkyUp starts flying to: Alicante, Antalya, Monastir (Tunisia) and Tivat (Montenegro). From Kharkiv, SkyUp’s new flights will be to: Barcelona, Kutaisi, Larnaca, Monastir, Odesa, Paris-CDG, Rimini, Tirana and Tivat.
SkyUp starts flying from a new regional airport last week – Kryvyi Rih. SkyUp starts flights to Sharm El Sheikh and to Antaliya. Later this year, SkyUp would like to fly from Cherkasy.
Poltava’s newly reopened airport, plans to start flights to Poland this year, and to Spain and Israel next year, Volodymyr Okary, the aiport director, tells Zmist newsite. This spring, the airport reopened with SkyUp charters to Sharm el Sheikh and Antalya, Turkey.
After re-opening last December, Mykolaiv airport carried 4,300 passengers during the first quarter. Growth is to continue, with SkyUp starting a flight on Wednesday to Antalia and MotorSich starting flights to Kyiv Sikorsky next month.
By the time Odesa’s new runway is completed this fall, Ryanair will become the city’s largest airline, with scheduled year round flights to five EU cities. One flight will go to Berlin, and four to Poland – Gdansk, Katowice, Krakow, and Wroclaw. The Krakow flight starts June 16. The other flights start Oct. 29.
With as many as 2 million Ukrainians working and studying in Poland, Ukraine has opened in Katowice its 11th honorary consulate in Poland. In addition, there are four consulates: Gdansk, Krakow, Lublin and Warsaw.
The news that Lufthansa recently inspected Zaporizhia airport, drew attention to southeast Ukraine’s fastest growing airport and its 12,000 square meter new terminal that opens this fall. Built to handle 400 passengers an hour, the terminal will soon handle flights by nine airlines to 12 destinations, including Barcelona, Istanbul and Warsaw. By contrast, Dnipro a city of 1 million people — one third more than Zaporizhia – has four airlines flying to four cities. To steal passengers from its rival, Zaporizhia recently started a direct bus route from downtown Dnipro to Zaporizhia airport, a 100 km, 90-minute ride.
Scheduled domestic flights should return to Mariupol by next year, Infrastructure Minister Volodymyr Omelyan tells Delo.ua. His ministry and the military are assessing safe landing approaches to this Donetsk region airport, which is only 35 km, west of the front line. Currently used for supply flights by the military, the Mariupol landing strip is considered in better shape than its rivals for civilian flights: Kramatorsk, also in Donetsk region, and Berdyansk, 80 km to the west of Mariupol.
Investing in Ukraine’s two Sea of Azov ports, the government has awarded tenders this month for the first major dredging in a decade of Mariupol and Berdyansk to Azimut Specialized Technical Bureau LLC, a Ukrainian company. With the winner determined by ProZorro online auctions, the two contracts total $27 million.
France is supplying a €64 million soft loan to supply drinking water to Mariupol, an Azov city of 500,000 people, a population swollen with refugees from occupied areas of Donetsk region. Under an agreement approved Thursday by the Rada, the 30-year loan with a 10-year grace period and an annual interest below 1% will help build modern water filter stations and to upgrade city water pipes to cut leaks of drinking water and sewage. A leader in the field, France exports water system technologies around the world.
The original English version is from our partner UBN – Ukraine Business News. For more information and news archive, go to: www.ubn.news.