May 31, 2018 / 11:31 AM / 25 days ago

Ukrainian workers sweat over fate of Deripaska's alumina plant

HALYTSYNOVE, Ukraine, May 31 (Reuters) - Ukraine's decision to put sanctions on one of Russia's wealthiest tycoons worries Vira Dudnyk. A driver at an alumina plant in southern Ukraine, she fears a tug-of-war between Kiev and Moscow may leave her jobless and on the streets.

"We are afraid if the plant is closed, what are we left with, who will feed us? Will the president come and give us a job?" she said while leaving work to a waiting company bus.

Ukraine, locked in a bitter conflict with Moscow, has joined Washington in imposing sanctions on Russian metals tycoon Oleg Deripaska. But that solidarity with the United States creates risks for the thousands of Ukrainians employed by an arm of Deripaska's business empire in the city of Mikolaiv.

"We (Ukraine with Russia) have a conflict in different spheres: political, economical ... but basically, we do not fight with Russia," said Oleksander Cherednychenko, chairman of the trade union committee of the Mykolaiv plant, by phone.

"Some parties demanded to cut relations with Russia completely. Well, then what? Stupidity."

The Mykolaiv plant near the Black Sea relies on imported raw materials and exports everything to Russia. It is vital to the livelihoods of thousands of Ukrainians in an area where the closure of three shipyards since the fall of the Soviet Union brought hardship.

"There is talk that (the plant) will be closed, passed on to someone, nationalized or (it is) still not clear what," Ivan Nazar, head of the local authority, told Reuters.

"And more than 2,000 people - 2,300 - from our territorial community, where do we go?" Nazar said. "For every worker there are three more people, a family."

It is as yet unclear how Kiev's decision to sanction Deripaska and his company Rusal will impact the plant.

A parliamentary commission set up to consider its future is weighing options, including forcible nationalisation or handing the asset to another owner.

Irina Prokhorova, a spokeswoman at the plant, said: "We have nothing to comment on, the plant is working as it was before."

No-one at Rusal, the world's largest aluminium producer outside China, was available for immediate comment.

The offices of Ukrainian President Petro Poroshenko and Prime Minister Volodymyr Groysman did not respond to a request for comment. The economy ministry declined comment.

The Mykolaiv plant (also known as Nikolaev or NGZ), which produced 1.68 million tonnes of alumina in 2017, is one of Rusal's nine alumina refineries around the globe.

ISLAND OF STABILITY

It is a crucial part of Rusal's complicated supply chain: it gets bauxite from Rusal's complex in Guinea, uses it to produce alumina then sends this to its smelters in Siberia.

Serhiy Hryshchenko, deputy industry minister when the plant was privatized between 1999 and 2002, said Ukraine does not have domestic bauxite, and anyone buying the plant could face difficulties in importing the raw material and selling alumina to Russia.

The country has other sources of aluminium but deposits have not been prepared for industrial exploration, he said.

"It is unlikely that a queue of people will form to buy a re-privatized NGZ," Hryshchenko said. "While the Mykolaiv shipbuilding plants almost stopped, NGZ has remained the only island of stability in the region."

The plant was privatized and bought by Deripaska's Rusal but the current ownership structure is more complex. It is owned by two Ukrainian companies, in turn owned by two firms registered to an address in Aruba of which Deripaska is beneficiary.

When Reuters visited the plant, workers still wore uniforms labeled "Rusal" though the company has removed the name from the front of the main office and on a sign pointing towards it.

"We ordinary people do not want to interfere in big politics, but all this must be solved at the policy level," said Natalia Panashiy, a member of the local village council. "Why is it a Russian factory? No, our people, Ukrainians, work here."

Iryna Kukina works for the local authority and her husband has been with the factory for 25 years, as had his father.

"People are ready to defend the plant," Kukina says, even if that means another Maidan-style protest the likes of which lit the fuse for the Ukraine crisis at the end of 2013.

The Mykolaiv workers say they are well paid and the company provides perks such as paid holidays and food stamps. "Everyone is happy with the work, the fact that there is a factory," said Inna Naumovych, whose husband works as a mechanic at the plant.

"When there is information in the media about sanctions, that something is going to happen to the plant, more than 80 percent of people are determined that it is necessary to defend their interests, they say: 'Bitches, hands off the factory.'" ($1 = 26.1000 hryvnias) (Additional reporting by Polina Devitt in Moscow Writing by Matthias Williams Editing by David Holmes)

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