For Ukrainian industry, the year 2020 passed under the sign of the COVID-19 pandemic and resulting economic crisis. In addition to the global problems faced by Ukrainian industry, a number of enterprises faced another challenge. This was reform of the administrative structure of Ukraine, which, first and foremost, directly affected “city-forming” enterprises.
One of these is Pobuzhsky Ferronickel Plant, located in the Kirovohrad region, and until recently was a city-forming enterprise in the town of Pobuzhske.
Denis Shevchenko, PFP Director General, told us how the company responded to the new challenges.
Last year was difficult to call a favorable one for the industry of the country. How would you assess the results of 2020 from the point of view of PFP?
Despite all the “surprises” last year, we can say that it we ended the year with a positive result. Although we were forced to restructure business processes as a result of the pandemic to ensure the safety of our staff and residents of the village, and we almost did not deviate from the plan.
From the first implementation of quarantine measures, and to this day, monitoring of the health of our employees has been enhanced at the plant. All employees are advised to limit physical contacts as much as possible. In addition, gathers of more than ten people was banned. In this regard, working shift meetings and management meetings were reduced. All employees are provided with sufficient disinfectants and protective masks. Providing self-isolation for the period of quarantine, employees at risk (over 65 years old) were granted paid leave. Wet cleaning and disinfection of crowded places where employees meet and equipment in those locations are constantly performed. The company also provides assistance to doctors employed by the local hospital and to ambulance workers of the region. In particular, medical institutions are provided with technical and medical devices, including an oxygen concentrator, necessary for hospitalization of patients with coronavirus infections, as well as personal protective equipment and disinfection products.
In order to help schools in setting up online educational processes, the plant purchased media equipment and computer equipment. At the same time, repairs were carried out in educational institutions, in the military committee, and at a local sports complex.
PFP also continues financing works on local infrastructure. UAH 313,000 were donated towards the community administrative center in the town of Pobuzhske, and provided UAH 130,000 towards expenses for local ecological improvements and garbage removal.
Important environmental projects last year included the completion of the next stage of modernization of gas cleaning equipment. This project is aimed at reducing the environmental impact of production. The total amount of investments in major repairs of equipment amounted to UAH 128 million.
Despite the fact that we had to shift the work schedule for a month due to the technical situation caused by weather conditions, it did not affect the quality of work nor the timing of the entire project.
In short, we have almost fulfilled 100% of our plans for 2020, also in terms of production indicators. The volume of processed raw materials amounted to 1.4 million tons, which corresponds to almost 15,000 tons of nickel.
How did decentralization of the administrative structure of Ukraine affect implementation of the plant’s plans and programs?
I consider the creation of the Pobuzhye Joint Territorial Community a positive moment because, having united, local communities received additional resources for their development.
Of course, the territory or “zone of responsibility” of the plant has formally expanded due to accession of several settlements with the territory of about 200 square km, and their population – more than 9,000 residents. Despite this slightly increased responsibility for the plant, this step in fact consolidated our cooperation on the official level.
Of course geographically we are located in Pobuzhske village, but our employees live, in particular, in local settlements included in the new Joint Territorial Community; therefore our social programs extend to these villages as well. Thus, from now on, our plant can be surely called not a city-forming enterprise, but a community-forming enterprise.
In the villages of Pushkove, Kapitanka, Lushnuvate and Sukhoi Tashlyk, which entered the Pobuzhske Joint Territorial Community, projects worth more than UAH 120,000 have already been implemented. They are aimed at the development of social, educational and medical infrastructure.
What is the situation with the power supply of the plant? To what extent does the frequent and not always justified increase in electricity tariffs affect the plant’s operations?
In December, the electricity network operator warned several times about the schedules of power reduction, and we were prepared for it. Fortunately this did not happen, otherwise the plant would have suffered large losses due to a possible reduction in the capacity of the furnaces, which might have led to a complete shutdown.
We are concerned about the situation with electricity tariffs: this greatly affects our work, since electricity is more than 35% of our cost of production. Any changes to the cost of electricity affect the economical and financial state of the plant.
Personally, it is difficult for me to explain these electricity price hikes. This was vividly obvious in the second half of 2020, and we do not know what the price hikes were caused by: either by a real shortage of electricity, or by the fact that such a situation was beneficial to someone. Moreover, as consumers of electricity, we can’t understand the situation on the energy market, in particular, the reasons for shutdowns of nuclear power station units while there was a shortage of energy.
How did the situation on the global markets for raw materials influence the plant’s operations?
Actually, we did not experience any significant problems. The plant was 100% supplied with raw materials and other goods, even during the pandemic. Therefore, last year we worked without interruption. Now there is a favorable situation with nickel prices on world markets; for this reason we feel optimistic about the future.
In your opinion, what are the advantages for the plant of joining a large international company?
PFP’s integration into Solway International Group brings us only positive aspects, starting with self-sufficiency in raw materials and the possibility of obtaining additional funding, and ending with the plant’s social policies. As a result of integration into the Group, the plant has a “financial cushion” allowing it to modernize its production and implement environmental and social projects – even during periods of equipment downtime and reduced production. In addition, our work, as well as the work of other Group enterprises, is based upon international business standards and principles for sustainable development, which also give us competitive advantages.
Based on your 2020 results, what goals has the company set for itself?
After joining Solway Group, we have access to funding for modernization and social development projects. We plan to increase processing volumes by 7% compared to 2020. This will allow the plant to increase its nickel production by more than 10%. In addition, investments in reconstruction and modernization of equipment will almost double, and investments in environmental projects will increase almost seven-fold. We also plan to increase our investments in social projects by more than 40%.
Why is so much attention paid to social projects?
We must return to the question of integrating PFP into the Group. In the world nowadays, more and more attention is paid to non-financial accounting, based on so-called ESG-criteria – list of ecological, social and managing factors used to make an analysis of a company’s activity from the perspective of sustainable development.
Today, in order to have access to financing, the company, along with its financial and production results, must voluntarily publish information about its relations with residents of the regions where its production is located, including the reporting system and its work with employees, suppliers and partners. The company should also indicate which specific actions it takes to preserve the environment, and how internal management processes are formed.
Recent trends show that profit and production growth are no longer the only measures of business success. In several years, companies that don’t include ESG criteria in their strategic planning or violate social commitments will become uncompetitive.
PFP’s strategy of setting non-financial priorities and achieving goals means that our company follows key indicators chosen by the investor for all Group companies. These are areas with the highest economic, environmental, and social impact.
For example, the field of education: it concerns not only the growth of employees’ responsibilities and the training of young specialists, but also the growth of the general education of the inhabitants of our region. After all, ultimately both the economy of the region and our plant are beneficiaries from this.
Are there any projects already launched under this strategy?
Of course, these projects include an information program for schoolchildren, which educates about the mining industry, and a Solway scholarship program for talented youths.
The project aims to increase knowledge about metallurgy and educate about career opportunities in the sector. Our long-term goal is to create a national Ukrainian program for professional orientation for high school students. It is a very ambitious plan, and it will certainly take years to achieve it.
So far, we are at the very beginning of this path, and much attention is paid to online communication with our audience. For this purpose, we use our specially developed interactive platform “PICH”. If the program develops successfully and proves to be effective, the investor will extend this experience to other countries in which it operates.
How is scholarship program for talented children related to metallurgy?
Most directly related! The program is aimed at giving young people skills which will in the future serve as additional bonuses for getting a job or organizing a business. The scholarship program provides English language proficiency, the ability to approach problems in a comprehensive way, to work in a multi-national environment, divide projects into tasks and processes, to achieve goals, and to create. In addition, it is much easier for such employees to move up the career ladder within the Group, because Solway assets are located in many countries of the world and managers with a unified set of skills are in demand.
Why do we address talented children first? Because they are united by common interests, and they are open to exploring their creativity. In addition, the above-mentioned skills are much more easily developed through art. Finally, the investor’s partnership with the world’s largest opera festival in Salzburg gives the project scale and enriches it with a variety of cultures. In other words, a model for the future is created in which scholars may apply the skills they gained through the program. Among the scholars of previous years there are those who were able to achieve professional and creative development thanks to the program.
How will the ongoing quarantine and economic crises affect the plant’s social programs?
I hope these factors will not affect the implementation of our plans both in terms of production and social programs.