On August 4, 2021, the State Geologic and Subsoil Survey of Ukraine issued the Order No. 569 that deprived the legitimate winning bidder, i.e. Mezhirechenskii GOK LLC, of the right to develop the Selishchanskii titanium ore deposit. The Ukrainian Geological Survey appointed as a winning bidder the UMCC-Titanium, a state-owned company and the runner-up. On August 9, 2021, the Ukrainian Geological Survey and UMCC-Titanium signed the sale-and-purchase contract for the special permit for subsoil use.
The reversal of the decision to sell the special permit to Mezhirechenskii GOK LLC was initiated by UMCC-Titanium with the lobbying support from the State Property Fund of Ukraine, which runs the company.
UMCC-Titanium addressed the Ukrainian Geological Survey and put forward a number of groundless accusations against Mezhirechenskii GOK LLC, charging the company with “sponsorship of terrorism and acts in the interests of the Russian Federation,” referring to Internet media publications dating back to 2015. Respective letters were forwarded to the Ukrainian Geological Survey, the SBU Main Directorate and the Prosecutor General’s Office of Ukraine. This letter served as a reason for the Ukrainian Geological Survey to suspend the signing of the contract with Mezhirechenskii GOK LLC and to send relevant inquiries to the SBU Main Directorate and the State Financial Monitoring Service of Ukraine.
We emphasize that none of the agencies in question provided any evidence or official confirmation for the charges brought against the Mezhirechenskii GOK LLC by the UMCC-Titanium.
According to the Ukrainian Geological Survey Order dated 04/08/2021, Mezhirechenskii GOK LLC was deprived of the right to obtain the special permit for the subsoil use “taking into consideration the information from the law enforcement agencies and subjects of the financial monitoring indicating that the winning bidder was financing the terrorism in Ukraine.”
The formalistic reason for the Ukrainian Geological Survey to deprive the Mezhirechenskii GOK LLC of the victory was the letter initiated by the SBU Directorate in Zhytomyr region. The Agency reported about the existing criminal case No. 4201500000000056 dating back to January 22, 2015, that brought forward the sponsorship of terrorism charges. Although, at the moment, these charges have been completely dismissed by the SBU in 2020 due to the lack of corpus delicti.
Hereby, Group DF officially declares that there is no legal basis for reversal of the auction results. The legal service of the Group DF’s titanium business will appeal against the illegal decision of the Ukrainian Geological Survey in court and, if necessary, will defend its legal rights in international courts. By violating the law and deliberately engaging UMCC-Titanium in prolonged litigation procedures around the Selishchanskii licensed area, public officials scare off the potential buyers of UMCC-Titanium and bring down its price.
Comments by Roman Chishinskii, attorney for the Group DF titanium business:
The cancellation of the auction results is a part of the ongoing pressure on the Group DF titanium business. We already observe the illegal attempt to take away 49% of ZTMC’s shares, and now there is another illegal attempt to take away our victory at the auction. Please note that the reversal of the decision to sell the special permit to Mezhirechenskii GOK LLC was initiated by the UMCC-Titanium, which for no good reason accused Mezhirechenskii GOK LLC of sponsorship of terrorism and acts in the interests of the Russian Federation. By juggling the facts, they compromised the legal purity of their actions. At the same time, neither the State Financial Monitoring Service of Ukraine nor the law enforcement agencies confirmed the preposterous charges against the Mezhirechenskii GOK LLC. We have already addressed the Ukrainian Geological Survey to reconsider this illegal decision. We have also filed a lawsuit to protect the legitimate business interests, other lawsuits are pending. We assume that the attempt to illegally revoke the license is associated with the SPFU’s inability to sell the Mezhirechenskii GOK at an auction scheduled for August 31 at the nominated initial price.