The development of Ukraine's mining and metallurgy companies within business groups

V. Venger

Economy and Forecasting, 2015, issue 1, 64-75

Abstract: Interest in the integration of Ukraine's mining and metallurgical complex appeared in the first half of the 1990s. This was due to the fact that it is exactly integration that allows access to technological innovation, reduces information costs, and improves the potential of relevant resources to overcome the imbalance of the sectoral technology chains. Indeed, the analysis of trends in the development of ferrous metallurgy within the leading business groups indicates that, thanks to integration, technological and cooperative ties strengthened, favorable conditions were created for a stable flow of raw materials, and, due to entering international metal markets, financial and economic situation of the sector significantly improved. The author reveals that favorable conditions and opportunities for restructuring the steel production were probably the main advantage resulting from such integration. However, as testified by the analysis of metallurgical enterprises, those opportunities were not used effectively and in full. On the contrary, being oriented to export of steel products, domestic manufacturers significantly reduced vintage and dimensional assortment along with the output of high-tech items, which led to increasing disparities between the structure of the potential demand for metal, the structure of the metal in demand on the domestic market, and especially the structure of the metal exported. The study found that, due to excessive diversification of the leading business groups (their activities have extended to the food industry, agriculture, fuel and energy complex, mechanical engineering, insurance, media, etc.) there is a problem of significant reduction in financial investments for steel mills. In this regard, the author proposes to focus the interest of business groups on increasing specialization and separation of the core business.

Date: 2015
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