Heavy metals schemes: Scrap metal business of Donbas militants

Author : Mykyta Sinitsyn

Source : 112 Ukraine

Smuggling has reached some unbelievable sizes, and the illegal ways of scrap metal delivery go through Ukraine
13:38, 27 January 2017

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Scrap metal business on the territory of the self-proclaimed "Donetsk People’s Republic" has been successful from the first days, as industrial Donbas has always had abundant resources of metal. Everything was used as a scrap metal: from the traditional covers of manholes and cable to equipment of the factories, whose owners did not take it from the territory of "Donetsk People's Republic".

Related: Donetsk and South Ossetia: Friendship of unrecognized republics

First, scrap metal business had rather "wild" character, usually fighters of illegal armed groups cut metal and sold it to the Russian Federation and Ukraine. Then, the business moved up, going to the hands of various kinds of "business persons" that are "under the roof" of the various armed groups.

Related: Russia reduces finances for “DPR”, “LPR” for past four months

Without exaggeration, millions of tons of metal, left on the territory of Ukraine’s temporarily uncontrolled part of the Donetsk region, is too tidbit not to be stolen by the leaders of the self-proclaimed "DPR".

Scrap metal was declared a strategic resource, belonging to "the republic", and April 8, 2016 it issued an order, which approved the rules for economic activities on the storage of ferrous and non-ferrous metals on the territory of the self-proclaimed "DPR".

It is hard to believe, but some rules regulating this sphere only one and a half years after the creation of the "state". Previously, this type of business was completely in the shade and in fact represented the criminal business of stealing a resource not only from Ukraine, but also from the so-called "Donetsk People's Republic".

Related: "DPR" limited import of products for citizens from Ukrainian side, - OSCE

The procedure for obtaining the license provided paying a fine of 200 to 500 thousand rubles, which at that time ranged from 80 to 200 thousand hryvnia, the creation of collection points, corresponding to the requirements, conclusion of contracts with scrap suppliers, and the requirements for proof of legal origin of the scrap metal.

Ex-mayor of Horlivka of so-called "DPR" Stanislav Kim highlights the importance of the scrap metal trade for the republic. Between proclaiming himself commander of the USSR troops, and a relative of Kim Jong-il and other antics, he tried to monopolize the market of scrap metal in Horlivka. To do this, "mayor" started correspondence with the so-called "head of DPR" Alexander Zakharchenko for creating Horlivka enterprise-monopolist to implement activities in the collection of scrap metal.

Related: Second office of "DPR" opened in Czech Republic, - media

Finally in July 2016, the "mayor" Stanislav Kim issued a decree, ordering to bring the metal to the LLC "Rosdontreyd" company, at a price of 5000 rubles (2000 hryvnia) per tonne. The resulting profit as stated, was to be sent for "to the patriotic education of youth and the improvement of the city".

However, a few days after this order Stanislav Kim was removed from his post.

Monopoly in Tashkent

The scheme which was failed to be implemented by the Mayor of Horlivka, was fully launched on the territory of the so-called "DPR". Actually, most likely, the monopoly has been established in more than one city, precisely because more serious players were going to capture control over scrap metal.

In late November, Industry and Trade Minister of DPR Alexei Granovsky and Minister of Revenue Alexander Timofeev, aka "Tashkent", gathered representatives of companies-traders of scrap metal in the "DNR" and orally delivered to the following fact. December 1, 2016 export of scrap metal on the Yenakiyevo Steel Plant, the only recycling scrap plant, was banned, and the only (exclusive) right to buy some scrap metal declared LLC "Trading House" Miner" at a price of 6,000 Russian rubles (at that time in 2400 hryvnia) per 1 ton including all fees.

Related: “DPR” leader ordered to jam “Ukrainian Radio” in occupied territories

"Trading House "Miner" is Ukrainian company LLC "Hercules", known in many regions of Ukraine as a manufacturer of food products. According to public information, "trading house" successfully combines the production of food with the production of iron, steel and ferro-alloys.

In the city-controlled Ukraine Kurakhovo there is Metallurgical Plant "Electrostal", whose owner is a part-owner of the company "Hercules", and here we can see the connection between the plant and the metal. Very cheap scrap in "DPR" can be sold at the price of 6000 hryvnia (about 13,000 rubles) per 1 ton in Ukraine.

"The license for doing business in the field of scrap metal cost from 200 to 500 thousand rubles, and I could sell assembled metal to Yenakiyevo Steel Plant at 5500 hryvnia per ton. Now I am forced to sell it to 2400 hryvnia. The plant is left without raw materials, and its employees without work," admitted one of the entrepreneurs operating in the field of scrap metal on the territory of the self-proclaimed "DPR".

Related: ”DPR” leader intends to negotiate about handing over Donetsk region to militants

The courts approve illegal business

Scrap metal is not drugs or weapons, and to make the business profitable, it is necessary to sell it in large volumes - cars and smugglers do not hesitate to take out. How is this possible?

June 12, 2015 the Order № 415 was issued of the first deputy head of the Antiterrorist Center at the Security Service of Ukraine "On approval of the interim order of the control over the movement of persons, vehicles and goods through the line of contact within the Donetsk and Luhansk regions." It lists businesses that have permits for movement of goods across the Line of Contact. Typically, this enterprise, which represent a single production chain, whose links are factories, shops, warehouses, were on uncontrolled Ukrainian territories.

They stood behind the shield, which help traffickers export goods from the territory of the so-called "DPR" and sell it on the territory of Ukraine. One of them was mentioned above metallurgical enterprise in Kurakhovo.

Related: OSCE warns of threat of chemical contamination in Donetsk region

However, do not think that this process is absolutely easy and nobody fights smuggling.

January 24, Ukrainian Security Service stated about the detention 19 scrap cars worth about 6 million hryvnia in Konstantynivka, Donetsk region, which came from the territory of the so-called "DPR". The shipment was the first attempt to organize the work of a permanent channel of smuggling of scrap metal, which belongs to "Miner Trading house". This metal was intended to be transported to Mariupol and sold to the steel industry of the port city.

Related: Chernysh: Railway in Donbas may help avoid queues at checkpoints

According to my information, the detention of the goods occurred in December 2016, and was accompanied by legal battles. Oktyabrsky District Court of Mariupol seized the goods twice and the decisions were contested by the owners of the cargo ships.

Finally, at the moment the Court of Appeal of Donetsk region decided to lift the attachment of the cargo, which means that the owners can implement it. And if the SBU does not prove its illegal origin, LLC "Trading House Miner" again would be able to pay "taxes to DPR" and fund the continued existence of the pseudo-state education and the war in Donbas.

Related: Poroshenko categorically rejects idea of giving up Donbas

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