How the Ilmenite of the State-Owned OGHK Ended Up in Crimea

Right now, as you read these lines, a small Syrian vessel called SOURIA-added to the U.S. sanctions list in 2016 for repeatedly violating the ban on entering the Black Sea waters off Crimea-is being loaded with the second batch of Ukrainian ilmenite from the United Mining and Chemical Company (OGHK) at the Turkish port of Hopa.

After loading, it will make a second run. It will switch off its AIS (Automatic Identification System) ship-tracking transponder and disappear toward the Kerch Strait, declaring that it is bound for the Caucasus.

In reality, OGHK’s ilmenite follows the route Odesa → Hopa → Feodosia → Armyansk. The details are described by the website Myrotvorets. Additional photos show in more detail how the vessels VENTO and SOURIA are loaded and unloaded in the ports of Odesa and Hopa.

Port of Odesa: loading VENTO with OGHK ilmenite

Unloading VENTO, Port of Hopa

Loading onto SOURIA, the same Port of Hopa

Why was the consignee hidden?

What are all these contrivances for? Secrecy, double loading, unloading, Turkey, the Caucasus, Crimea… A long chain makes it possible to hide the ultimate buyer-PJSC “Krymsky TITAN” owned by Dmytro Firtash. Ukrainian enterprises are prohibited from trading with it. Hence a scheme involving many participants was devised-ranging from the leadership of OGHK and the State Property Fund to the government and the Office of the President. Otherwise, you can’t pull off such a “scheme.”

A dark horse

Let’s start untangling this multi-move setup with the front company that was supposed to cover the back of OGHK’s chief-the Briton Peter Davis-and put dollars into the pockets of everyone involved in the supplies to Crimea. OGHK’s ilmenite was purchased by the German company ITS International Trade & Sourcing GmbH & Co, registered in Düsseldorf (ITS). Its staff consists of a few people with Slavic surnames; one of them is the director Oleh Tsyura.

This is a dark horse whose name means nothing to the major players in the titanium market. A small fry, by producers’ standards, that resells goods and services. Before Tsyura “took on” the OGHK contract, ITS’s annual turnover did not exceed €1.5 million.

The Sennichenko-Davis tandem

The person who helped improve the finances of this German-based “front” was the head of the United Mining and Chemical Company, Peter Davis. He was brought in as an adviser to run OGHK’s affairs personally by the head of the State Property Fund, Dmytro Sennichenko, in February of this year. Then Sennichenko ensured a lightning career for this non-resident: first deputy chair of the management board, acting chair (the technical acting chair Mykhailo Makarov dropped out of the game in June). And on 22 July, when a Syrian ship with a bad reputation was already standing under loading with OGHK ilmenite in a Turkish port, the Cabinet of Ministers appointed Peter Davis acting head of the management board. So they are satisfied with Davis’s work. Or someone is whispering the “right” personnel decisions in the state sector to the prime minister.

Whether the appointee is working for the benefit of these guys or those-the law-enforcement bodies can sort that out. But the deal that set the Crimea route in motionwas concluded back on 17 June. It was sealed with the signatures of Oleh Tsyura and Peter Davis.

The document shows that the “front” ITS would buy 24,000 tons of ilmenite concentrate from OGHK at a price $20-40 per ton below market. The raw material was bought at $172 per ton; in June the market price was $260-280 per ton with deliveryand $190-210 without delivery. The contract was concluded with a 15-day deferred payment, without sampling, in an atmosphere of complete trust and agreement. Deal value: €3.7 million. Under such conditions, someone pockets around $1 million on this contract.

A small detail-at OGHK Peter Davis is provided with a 22-person security detail. Not at the state’s expense. Whose money might that be? Riding around with a motorcade of a minibus and SUVs is not a cheap pleasure.

Where does Firtash come in?

The devil is in the details. The ilmenite purchased by Tsyura contains 54% TiO₂. Within OGHK, only the Irshansk Mining and Processing Plant produces such concentrate. Why is that important? Because this ilmenite is used only by pigment producers. In Russia there is only one such processor-Krymsky TITAN owned by Dmytro Firtash. The businessman’s plant has been accustomed to ilmenite from Irshansk since 2004, when all Irshansk supplies were reoriented to Crimea-the raw-material producer was leased by the processor. It was a convenient technological arrangement.

In 2014, with the annexation of Crimea, a ban and sanctions were introduced on trade with the Russian Federation. Krymsky TITAN had a problem: a chronic shortage of feedstock. The businessman’s own volumes-250,000 tons of crude per year-were not enough. And Krymsky TITAN together with Sumykhimprom (also managed by structures of Firtash) require over 400,000 tons annually-not crude, but ilmenite upgraded to a marketable grade. So says Dmytro Hordeichuk, director of the news agency Infoindustry.

“The new upgrading plant in Irshansk can ensure the loading of Sumykhimprom, but the Crimean enterprise lacks the volumes. It needs 300,000 tons per year of marketable ilmenite with TiO₂ content around 54%. And that creates a problem. Because even if all those volumes existed, supplying them to Crimea would be a precedent for media hype and reputational damage to the business,” comments expert Hordeichuk.

Solovey-Vaskov and the Opposition Bloc

And here an opportunity emerged to plug Crimea’s deficit with feedstock from the state-owned OGHK. Firtash’s people are of course no fools. They quickly “put to use” the Briton’s loyalty to their group. The thoroughly “one of our own” Peter Davis was, in the recent past, a member of the supervisory board of Clearing House Bank, whose shareholders are Fursin-Lyovochkin-also Firtash’s business partners. Davis has also been noted by the media as a financial adviser to companies in Firtash’s group involved in foreign investment projects.

But if you think the ship caper was pulled off by Peter Davis and the “German” Tsyura alone-you’re mistaken. To carry out this wrongdoing in favor of a Russian asset, the State Property Fund planted another wizard in OGHK-Yuriy Solovey. At OGHK, as a member of the management board, he handles security matters.

Solovey has long been in cahoots with the former head of the Ukrainian Sea Ports Authority, Yuriy Vaskov. Under the “regionals” (the Party of Regions), Vaskov made a meteoric career-from chief dispatcher to head of the Odesa Sea Port in just a year (2011-2012). In 2013 he was already first deputy head of the Ukrainian Sea Ports Authority; in 2015-deputy minister of transport of Ukraine. A staunch Party of Regionsman, a favorite of former president Yanukovych’s team, a sympathizer of the Opposition Bloc, and an aide to Serhiy Lyovochkin. How could he not help save the business of his buddies in Crimea?

Workers of the Odesa Sea Port say that container ships with OGHK ilmenite bound for Crimea were “moved,” literally and figuratively, by Solovey and Vaskov. And when there was a hitch with the shipment-the anti-smuggling unit of Odesa customs was outraged that VENTO, according to the declaration, was bound for nowhere-“the Mediterranean Sea” with no discharge port indicated-the matter was taken up by the head of the State Property Fund, Dmytro Sennichenko.

The self-proclaimed anti-corruption crusader and “Sorosite” Sennichenko personally ran around government offices to have the cargo dispatched to its destination. And Solovey, tirelessly, wrote angry letters to customs officers, saying, how dare they obstruct the sale of the strategic product of a strategic enterprise of the country! There are no random people in the scheme. Everyone did their part.