The shadow of Medvedchuk: Zaporizhzhia ore and Donbas coal

Having found himself in the russian federation after the prisoner exchange, former leader of the banned in Ukraine pro-russian bloc, V. Medvedchuk, is engaging in familiar activities. Just as before in Ukraine, this includes embezzlement of state funds (now from the federal budget) and raiding. The fact that putin is the godfather of his daughter allows him to do this with impunity.

New resident

Donetsk media reported in the second half of April that the Dniprorudny Iron Ore Plant (DIOP) became a participant in the "free economic zone" (FEZ) in the occupied Ukrainian territory.

Before the major war, this enterprise, owned by the Slovak group Minerfin of T. Hrenek and SCM of R. Akhmetov, supplied iron ore to the Třinec Iron and Steel Works in the Czech Republic and the Zaporizhstal Steel Plant, owned by T. Hrenek and R. Akhmetov, respectively.

Iron ore mining was carried out at the "Ekspluatatsiina" and "Prokhidnytska" mines with a total capacity of 4.5 million tons per year (pre-war indicator). After the occupiers arrived in May 2022, the enterprises stopped, and attempts to restart them ended in failure.

Firstly, the new "administration" proposed that miners work as before, but only for 60% of their previous salary. That is, reducing salaries and bonuses by almost half.

Secondly, the lawful owners of the enterprise continued to pay their employees 50% of their salaries for some time, as during forced downtime.

Finally, as previously noted by OstroV, after the capture by the russians, the Zaporizhzhia Iron Ore Plant (ZIOP, the legal name of the enterprise) lost its sales market. Collaborators explored the possibility of establishing illegal ore exports through Crimea, but this venture failed.

Therefore, in June 2022, out of a workforce of 5,000, only 85 people were employed – security guards of the enterprise. And "production activities" were limited to shipping 5,000 tons of ore to Donbas, from warehouse stocks.

However, already at the end of September 2022, propagandist media outlets reported, citing representatives of the occupation administration, that 3,000 people had returned to work at the ZIOP. They also reported the signing of a contract for the supply of 415,000 tons of ore to the "LNR"-"DNR". It was also claimed that the plant intended to restore production to 3 million tons per year.

Interestingly, a year later, in late October 2023, russian media published the exact same information, citing the "deputy head of the administration of Zaporizhzhia oblast" A. Kozenko, who visited the enterprise. He spoke about the signed contract for 415,000 tons and the production plans of 3 million tons per year.

From this, it follows that nothing has changed over the past year. The signed contract has not been fulfilled. But the "great" plans remain. On paper. In reality, the plant did not start operating.

The fact that the "return to work" of 3,000 people (it was claimed that 600 workers were present in each of the 3 shifts daily) is a propaganda fake is indicated by the inconsistency of this number with the existing contract.

The figure of "415,000 tons" can be considered realistic – considering that the metallurgical plants in the "LNR"-"DNR" were already practically idle at that time. For context: the Yenakiieve Plant alone consumed around 1.9 million tons of ore per year until 2014.

In addition to it, the Donetsk and Makiivka Metallurgical Plants, plus the Alchevsk Metallurgical Complex, are part of the so-called "Southern Mining and Metallurgical Complex" (SMMC) in the occupied territory. There are no other markets for ZIOP's products.

But 415,000 tons is less than 10% of the capacity of the Dniprorudny Iron Ore Plant before the occupation. The question is: why attract 60% of the previous workforce to extract such a volume of ore?

Well, no one attracted them. Among the recent job openings at the DIOP (dated April of this year) – there is only a position for an archivist. It is indicated that this is for compiling archival references for payroll.

But the absence of production does not prevent the new "owner" of the ZIOP from "milking" the federal budget for billions of rubles. Earlier, OstroV noted that the so-called "special economic zone" is fertile ground for embezzlement.

With this in mind, in late November 2023, the State Duma of the russian federation simplified the requirements for recipients of government support (including budgetary financing through specialized funds, including the Fund for the Development of Territories) in the "new regions".

Now, to receive preferential bank loans and budgetary subsidies, confirmation of production activities in the occupied territories is not required. It is enough to simply go to the same specialized fund and say, "I have a plant in Dniprorudny, give me money for its development". And the money will be provided.

The DIOP has declared a rather "modest" investment project of 2.8 billion rubles. Allegedly, this amount is intended for the overhaul of mining equipment and the renewal of the vehicle fleet. Allegedly, this will help the enterprise increase its annual production to 5 million tons by 2025 (i.e., very soon).

Given the above, this is obviously an unrealistic plan, but who cares? The main thing is to secure 2.8 billion rubles for it.

Who will be the future lucky owner of the "free" money?

At the end of last year, journalists found out that the DIOP was transferred to the management of LLC "Industrial Innovations", in which 49% belongs to lawyer A. Barymov, closely associated with the russian projects of V. Medvedchuk.

The investigation materials note that "Industrial Innovations" is registered in Donetsk, and the connection of this company with Medvedchuk can be traced not only through A. Barymov.

Coal (t)rader

Milking the federal budget under the guise of the "FEZ" can be done not only through the illusory DIOP. Several coal mines, which have not yet stopped operating in the occupied territory, are also suitable for this purpose.

Earlier, OstroV reported that in the "DNR", three mines of the Torezantratsyt Association and the Donetsk "Komsomolets Donbasu" (once the largest producer of thermal coal in Ukraine), were leased to a certain "investor".

The lessee was LLC Impex-Don, registered in Rostov-on-Don back in 2015, with a charter capital of 10,000 rubles.

Nevertheless, this company undertook to invest 11.2 billion rubles in the "Komsomolets Donbasu" and over 4.4 billion rubles in the mines of Torezantratsyt Association. According to its financial statements, it had a balance of 34.5 million rubles and an annual turnover of 115 million rubles.

Obviously, Impex-Don plans to get the missing billions in the form of bank loans and subsidies from the Fund for the Development of Territories. But whether this will lead to the stated increase in production to a total of 2.72 million tons per year is a big question. Just like in the case of the DIOP. More likely, the money obtained through a long chain of "pass-through" firms will comfortably "settle" in offshore accounts.

However, the financial insolvency of the "investor" did not bother the "Ministry of Coal Energy of the DNR" for one reason. The deal was "blessed" in the kremlin. Otherwise, it simply would never have happened. And it can be assumed with a high degree of probability that behind Impex-Don stands the same V. Medvedchuk.

Also, registered in Rostov-on-Don is the company Don Coal, with which (according to the results of the SBU investigation) sanctions were imposed by the National Security and Defense Council of Ukraine against the former leader of the Opposition Platform – For Life in February 2021.

Since February 1, 2021, this company has declared itself the sole purchaser of coal from mines in the occupied territories of Donbas. Therefore, it can be concluded that V. Medvedchuk has been controlling the remnants of the coal industry in the "DNR"-"LNR" for quite a while.

In April of this year, Don Coal took over the management of the mines "Samsonivska-Zakhidna", "Dolzhanska-Kapitalna", "Komsomolska", mine named after Frunze and the one named after Vakhrushev in the Luhansk oblast.

Medvedchuk could also have "leased" Donetsk mines to Don Coal. But if we recall how he built his business in Ukraine, it was never structured as a single centralized entity like a holding company.

It was always like having eggs spread across different baskets. This scheme is more complicated in terms of administration. But it's safer. If by any chance they "destroy" him, they'll only hit 1-2 "eggs" at a time, not all at once.

Of course, nowadays this doesn't pose a threat to him in russia, thanks to his closeness with putin. But once upon a time in Ukraine, he was practically all-powerful. And he ended that chapter of his history in an SBU detention cell.

By Vitaliy Krymov, OstroV