News Industry Ukraine’s mining & metals sector 27 April 2023
Domestic enterprises are already conducting work on fixing and assessing damage as a result of Russian aggression
Domestic business supported the government’s initiative to create an international register of losses, recording and assessing damages as a result of Russian aggression.
Ukrainian entrepreneurs are also conducting measures for independent expert assessment of damages. Last week, lawyers of a number of enterprises took part in consultations with forensic experts regarding the conduct of a forensic examination to record and assess damage (both direct and indirect), including lost profits, caused to enterprises as a result of the Russian Federation’s aggression.
Last December, the Ministry of Justice registered a joint order of the Ministry of Economy and the State Property Fund of Ukraine. This document approves the methodology for determining the damage and amount of damage caused to enterprises, institutions and organizations of all forms of ownership as a result of a full-scale invasion of the Russian Federation, as well as lost profits. According to the executive director of the Ukrainian Ferroalloy Producers Association (UrkFA) Sergiy Kudryavtsev, the specified technique will be mandatory for use, as well as for forensic examination. Currently, the official publication of the order is expected, after which it will enter into force.
“Today, many large businesses are already conducting active work on recording and assessing losses, which requires the involvement of forensic experts, whose opinion will be used by enterprises to justify claims for recovery of losses at the expense of assets of the Russian Federation in the relevant courts,” noted Sergiy Kudryavtsev.
In particular, the Pobuzhsky Ferronickel Plant (PFP) plans to turn to forensic experts for the appropriate research and opinion. The aggression of the Russian Federation caused real damage to the enterprise and affected the socio-economic situation of the local territorial community.
“As a result of Russian attacks on the energy system of Ukraine, starting from November 1, 2022, PFP was forced to stop work. Both the electric furnace for the production of ferronickel and part of the main steel equipment were stopped. In addition, the Pobuzhske town was cut off, and the plant, which is a city-forming enterprise for the village, was forced to lose the possibility of providing communal services,” said the CEOr of PFP Denys Shevchenko.
According to him, currently the preliminary estimate of the amount of damages is about $12 million. According to the PFP head, in the condition of receiving reparations from the aggressor, compensation for costs due to disruption of the normal operation of the country’s transport system should also be provided for. Denys Shevchenko believes that the involvement of international institutions in collecting damages for the benefit of Ukrainian business will contribute to the faster recovery of the country.
The amount of losses announced by the combine is only preliminary. Disruption of logistics after the beginning of the Russian invasion led to the impossibility of obtaining the necessary volumes of raw materials, the plant was forced to stop one electric furnace. Today, PFP does not process iron ore into commercial ferronickel.
“Before the Russian missile attack on the substation, we were working with partial load – approximately 40% of the main load. After the bombing of the substation, the plant was left without power supply, which stopped the furnace and its support systems. We carried out a number of measures aimed at preventing an accident, as the furnace was loaded with liquid steel and slag with a total weight of about 1,500 tons,” said Denys Shevchenko.
Rustam Dzhamgurov, deputy CEO of PFP for legal issues, in turn, emphasizes that the involvement of judicial experts, including international ones, is a necessary prerequisite for preparing a lawsuit. And the creation of a corresponding register will make it possible to objectively assess the amount of losses with the aim of their further recovery at the expense of assets and reparations from the aggressor state.
“Also, we are waiting for the definition of a clear mechanism to recover the damage caused to Ukrainian business at the expense of the assets of the aggressor state. Without this, any lawsuits in Ukrainian and/or international courts are problematic, and the decisions of these courts may not be implemented,” said the lawyer.
As GMK Center reported earlier, the Business community of Ukraine, united by several associations, in particular the European Business Association (EBA), called the parties of the Black Sea Grain Initiative – the UN and Turkiye – to contribute to its stable operation, continuation and expansion, and to ensure free trade navigation in the Black Sea region.