Ukraine Court Rules to Nationalize Russian Company’s Stake in Aluminium Giant

KIEV, Ukraine -- Kiev’s economic court ruled to return to state ownership a controlling stake in the Zaporozhye Aluminium Smelter which is owned by Russia’s SUAL group. Simultaneously, a Ukrainian state property fund official said that an 18-percent stake in Ukrtatnafta, which belongs to companies affiliated with Russia’s Tatneft Oil Company, will also be returned to state custody.

It has been little more than a month since the meeting between Ukraine’s President Viktor Yushchenko and Russia’s top businessmen. As MosNews reported, Yushchenko promised Russian companies a favorable investment climate. But the recent actions by the Ukrainian authorities are in complete contradiction to the president’s statements, Russia’s Kommersant daily notes.

The conflict surrounding Zaporozhye Aluminium Smelter began after its privatization in February 2001 when 68.01 percent of the smelter’s shares were bought by Russia’s AvtoVAZ-Invest (AVI). Immediately after the auction AVI’s competitor, Ukrainian VTF KrAZ, went to court with a demand to revise the results of the auction. Ukraine’s Supreme Arbitration Court ruled that the deal was lawful back in 2001, but until recently a court order prohibited the new owners from investing in the plant’s modernization.

At the end of February the prosecutor’s office of Zaporozhye region ruled that the shareholders failed to fulfill the privatization conditions by not investing in the plant’s modernization. This was enough for the economic court to rule that the deal should be broken up and the controlling stake in Zaporozhye Aluminium Smelter should be returned to state custody. After that, the head of the Ukrainian state property fund said, the smelter will be re-sold to Ukrainian entrepreneurs.

The head of the state property fund also said that Ukraine plans to return to state custody the 18-percent stake in Ukrtatnafta which belongs to AmRuz and Sea Group, both affiliated with Tatneft. The nationalization of this stake will deprive the Russian oil company of control over Ukraine’s largest oil processing plant.

Kommersant reports that the next candidate for nationalization claims may be Russian Aluminium (RusAl) which owns a 30-percent stake in the Nikolaev Alumina Plant.

Source: Mosnews