New plant in Italy and electricity storage complex in Poland: key investments of Ukrainian business in the EU

How Ukrainian industrial giants developed their business in Europe during the last year

According to the Association of Ukrainian Business in Poland, the total amount of Ukrainian investments in this country has already reached more than €1 billion. In turn, according to the president of the Romanian Chamber of Commerce and Industry, Mihai Daraban, more than 300 Ukrainian companies started operating in the Romanian market last year alone. Not all EU countries have such statistics, but almost all of them have recently seen businesses with Ukrainian capital emerge and actively develop on their markets.

In September 2023, we at GMK Center already found out which Ukrainian entrepreneurs are actively conquering European markets and what our business can offer the EU. Now we will see whether they have slowed down and whether new players have entered the markets.

Steel industry

Let’s start with the largest investments. Metinvest Group plans to build a new green steel plant in Piombino, Italy. This was announced by the company’s CEO Yuriy Ryzhenkov in an interview with La Repubblica, one of the largest Italian newspapers. The Piombino plant will be one of the Group’s most technologically advanced and environmentally friendly facilities. It will serve as a pilot project for Metinvest’s future investments in Ukraine during the post-war reconstruction period.

The company expects that the future Italian plant will produce steel using iron ore from Ukraine, which will increase the utilization of domestic mining and processing plants.

«We planned to build a plant in Italy long before the invasion. Back then, the idea was to use semi-finished products from Azovstal for further processing in Italy. Now we know that Azovstal no longer exists. But we have iron ore enterprises in Ukraine that produce high-quality iron ore that can be used to make DRI/HBI. Therefore, the idea now is to build a plant that will use iron ore from Ukraine to produce steel in Italy,» explains Ryzhenkov.

According to him, Italy currently imports about 6 million tons of steel products. The production that Metinvest plans to launch will significantly reduce this deficit.

Metinvest expects to start construction of the plant at the end of 2024, if the program agreement is finalized by the middle of this year. Production is expected to start in 2027.

Before the war, Metinvest Group had production facilities in Europe. In particular, it operated Promet Steel in Bulgaria with an annual capacity of 500,000 tons of rolled steel, and Metinvest Trametal and Ferriera Valsider in Italy with a total capacity of 1.2 million tons per year. In addition, the group owns Spartan UK in the UK, which can produce 200,000 tons of rolled steel per year.

Mining

At the end of 2023, Vesco Group, which unites the raw materials business of SCM Group’s UMGI investment company, began developing a clay quarry at the Encarnita deposit in the Spanish province of Teruel. The planned production capacity of the new quarry is 100 thousand tons of ceramic raw materials per year.

According to the company’s release, the local market of the Spanish ceramic industry will be the priority market for ceramic raw materials made from Encarnita clay. Spain is one of the largest ceramic tile producers in Europe.

Engineering

The research and production enterprise Energo-Plus has invested almost UAH 40 million in the establishment of TWERD Energo-Plus in Poland. The Ukrainian-Polish enterprise will manufacture high-voltage frequency converters for motors that drive pumping equipment and conveyors, mine hoists and other equipment for industrial and mining enterprises, water utilities, and water supply systems.

The company’s press service told reporters: «This will create an alternative to the de facto monopoly on the global market of Chinese manufacturers of high-voltage frequency converters for 6 and 10 kV motors.»

Hydrosila Group, the largest Ukrainian manufacturer of hydraulics, is also moving part of its production to Poland. Last year, the company acquired a 1.6-hectare plot and an almost finished production building in Wroclaw. The company plans to set up a medium-sized facility that will produce hydraulic cylinders and gear hydraulic pumps.

The new production facility will allow the company to increase the supply of hydraulics to assembly plants producing agricultural, construction, road and municipal equipment in Germany, as well as to optimize logistics processes in general, as 80% of its products are exported.

Energy

DTEK has become a participant in the future construction of Poland’s first major electricity storage project. On March 27, DTEK’s subsidiary DRI signed an agreement to buy shares in a special project company established by Polish company Columbus Energy, which will give it the right to build 133 MW of electricity storage systems in southern Poland, subject to obtaining the necessary permits.

According to the company’s release: «Electricity storage systems are a key technology for accelerating decarbonization through the introduction of renewable energy sources, while maintaining the flexibility of the power grid.»

DRI plans to start construction at the site in Q4 2024 to complete it and put the facility into operation in early 2026.

DTEK Group has previously had experience with energy storage technology. In 2021, DTEK launched Ukraine’s first industrial lithium-ion energy storage system (ESS) with a capacity of 1 MW and a storage capacity of 2.25 MWh in Enerhodar (currently temporarily occupied territory of Zaporizhzhia region). The battery was installed at the site of Zaporizhzhia TPP to accumulate, store and supply electricity to the grid.

Deepening cooperation with the Polish power system is beneficial not only for DTEK but also for Ukraine as a whole. This will allow us to rely on electricity supplies from the EU in the face of energy shortages caused by the Russian terror and partially compensate for the destruction of shunting generation.

Pharmaceutics

In March 2024, Farmak’s international office announced the closing of the acquisition of Polish Symphar, becoming a 100% owner of the pharmaceutical company with annual revenues of over €22 million.

Symphar is a Polish pharmaceutical marketing company based in Warsaw. It works with more than 50 products in the field of diabetology, gynecology, psychiatry and neurology. This agreement allows Farmak to increase its market share and strengthen its position in the diabetes, nervous system and women’s health segments in the EU.

Farmak has been operating in the Polish market since 2016 and is gradually expanding its portfolio with its own medicinal products.

In the summer of 2023, the Company also acquired pharmaceutical companies in the Czech Republic and Slovakia with the relevant intellectual property rights and trademarks.

Food Industry

In April, Three Bears LLC, one of the largest frozen food producers in Ukraine, has acquired the Nordis plant in Zielona Góra, Poland. This is the company’s first foreign asset. Three Bears did not disclose the amount of the deal, but is already preparing to increase the capacity of the acquired factory and export products to other EU countries.

Nordis currently produces more than 100 types of ice cream and semi-finished products and has a distribution network in 19 cities in Poland.

Kormotech, a leading Ukrainian manufacturer of cat and dog food, also made investments, and at the end of last year decided to expand its production in Kėdainiai (Lithuania). The company planned to invest €60 million in four production lines. The first new production line will be launched by 2025. Then one line will be added every year until the four production lines are fully operational in 2028.

Today, the wet feed production facility with a capacity of over 20,000 tons per year employs more than 170 specialists from Ukraine and Lithuania. The expansion will create another 200 jobs. This is a significant contribution to the town of 30 thousand people.

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While foreign businesses are trying to enter the Ukrainian market, expecting to benefit from Ukraine’s integration into the EU, Ukrainian businesses are simultaneously conquering European markets. As the Ukrainian economy is currently in a difficult situation, with energy resources in short supply and the transit of goods difficult, it is important for businesses to access new markets without incurring unnecessary logistics costs.

The most popular markets for Ukrainian entrepreneurs are those of their closest neighboring countries, such as Poland. However, they also pay attention to the countries of Western Europe.

As we can see, Ukraine’s economic integration into the EU is gaining momentum from year to year, which will ultimately have a positive impact on the development of businesses within the country.