Sumy TiO2 privatisation looms

By Simon Moores
Published: Monday, 16 August 2010

State-owned Ukrainian titanium dioxide producer explores private ownership

JSC Sumykhimprom, the Ukrainian titanium dioxide (TiO2) producer, is exploring privatisation in a move that will see a shakeup of its management practices and get the manufacturer back on track. 

The 40,000 tpa sulphate producer based in the country’s north only produced 20,000 tpa in 2009 and is struggling to get to full capacity because of what was described as “ineffective management” by a source close to the company.

New Ukrainian public-private partnership laws have been relaxed in recent months which could open the door for a possible buyout of Sumykhimprom although there is yet to be any interested foreign parties.

The country’s TiO2 producers have benefited from cheap imported gas from Russia, which underpins the Ukrainian economy. Recent hikes in domestic household gas prices by 50% have sparked concern that the same may happen to industrial supply.

If this happens, TiO2 producers will be hit hard such is their reliance on the energy source.

This was demonstrated last year during the gas dispute between Russia and Ukraine over a $2.4bn. unpaid bill, which resulted in a supply restriction and suspensions at Crimea Titan, the country’s leading TiO2 manufacturer. 

But with a pro-Russian government now in place in Ukraine, supplies of gas are likely to be flowing in abundance in the short-term but whether Sumykhimprom is a desirable prospect remains to be seen.

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