Andriy Brodskyi takes titanium from the State Geological Service

In order to secure the loan, the borrower mortgaged the main production facilities to PIB and committed to sell products exclusively through the bank. According to the business plan, “Velta” was supposed to repay the loan in 2016. However, the mining complex never reached its design capacity. The maximum production volume of concentrate achieved in the summer of 2014 was 5.2 thousand tons per month for each phase, around 125 thousand tons per year. By October 2014, the first phase of the titanium raw material enrichment complex located in Korobchyne village (Novomyrhorod district, Kirovohrad region) was almost completely burned down in a fire. As a result, “Velta” lost 60% of its production capacity, and it became clear to everyone that the debt to PIB would not be paid on time. Law enforcement concluded that the fire was intentional, but no perpetrators or instigators were identified.

By the end of the PIB debt repayment period, which ended on June 30, 2016, according to the contract, the parties did not agree on the extension of the loan agreement “due to significantly altered circumstances,” as “Velta” desired. As a result, legal proceedings began, which dragged on for several years. The bank demanded the return of the debt with interest and penalties totaling about 110 million dollars, while “Velta” sought to extend the loan repayment term to 2021.

Disputes continued with varying success until February of this year, when “Velta” and the allied company “Zvezdapark” withdrew their lawsuits. This could be perceived as a sign of pre-trial settlement of “Velta’s” credit issue with PIB.

It seems that the resolution of the prolonged litigation with the main creditor amidst the completion of reconstruction work on the mining and concentrating complex greatly encouraged Brodskyi. After all, the company managed to “push through” the State Service of Geology and Mineral Resources in the dispute over the Lekarevske deposit just a few weeks after settling disputes with the VEB’s daughter company. “Velta” obtained a special permit for the geological study of this undeveloped site in December 2011, and its term ended after 5 years.

It appeared that “Velta” had forgotten about this project amid unresolved financial issues, but the company’s sentiment changed by spring 2017. On May 2, 2017, “Velta” signed a memorandum of intent with the American company CMC Cometals to build a mining complex with a capacity of 120,000 tons per year on the basis of the Lekarevske deposit, directing 30 million dollars towards these goals. By May 29, 2017, the company submitted documents to the State Service of Geology and Mineral Resources to obtain a full-fledged special permit.

However, the geological agency refused to issue the permit voluntarily. “We have every right to obtain an industrial license since we conducted geological exploration of this deposit on our own at our own expense. However, the State Geology (State Service of Geology and Mineral Resources – “OLIGARCH”) operates according to some program understood only by them, and predicting when they will issue us a license is quite difficult,” complained Brodskyi to journalists last year. In December 2018, the consideration of “Velta’s” lawsuit began, and just two months later, it was fully satisfied.

Interestingly, this is the second decision of the Kyiv District Administrative Court made in favor of Brodskyi’s company in recent months. In November 2018, the same court, at “Velta’s” lawsuit, canceled the order of the State Service of Geology and Mineral Resources, which suspended the special permit for the development of the Birzulivske deposit. However, this verdict has not yet entered into legal force – the geological agency filed an appeal, which will be considered next week.

Yehor Kazhanov