Ukraine sells state-owned titanium producer in privatization auction to fund state coffers.

Ukraine sold state-owned UMCC-Titanium for Hr 3.94 billion (£96 million) to Cemin Ukraine, the country's State Property Fund said on Oct.

9 in a statement. As Russia's war drags into its third year, a difficult business climate and decreasing tax incomes has strained Ukraine's state budget, with almost half of its planned expenses for 2024 covered by foreign aid and loans. Earlier this year, the country's finance minister warned of a gap in Ukraine's state budget of £5 billion for military expenditures.

"The budget will receive significant resources for strengthening our defense capabilities," Ivanna Smachylo, the head of the fund said in the statement. UMCC-Titanium is one of the world's largest producers of titanium, and miners of rutile and zirconium concentrate. The company was established by Ukraine's government in 2014 to manage and operate the Vilnohirsk and Irshansk mining and metallurgical plants, and has been managed by the state property fund since 2019.

Cemin Ukraine, a Neqsol Holding company, was the sole bidder in the auction. The international Neqsol Holding group of companies is owned by Azeri businessman Nasib Hasanov. The company owns Vodafone, Ukraine's second-largest mobile operator.

According to the terms of the sale, the buyer is required to preserve the company's main activities, invest at least Hr 400 million (£9.7 million), and repay arrears and overdue payables to the state budget, which amount to Hr 609 million (£14.8 million) as of the end of March, the fund's statement read. The Cabinet of Ministers still has to approve the sale. The privatization is part of the country's "Great Privatization" initiative, recently relaunched in September as a way to bring more revenue to the state.

Privatizing large state-owned assets in the country has been slow to take since the country gained independence in 1991 largely due to corruption and mismanagement. "Several more enterprises in this industry are planned for privatization in the future, in particular, Demurinsky GZK and "VSMPO Titan Ukraine," the statement added. In a recent auction, the symbolic Hotel Ukraine located in central Kyiv was sold at an online auction in for Hr 2.5 billion (£61 million) to Ukrainian businessman Maksym Krippa.

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