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EXCLUSIVE Editor's Choice War in Ukraine Interview

How Ukraine's Largest Investment Holding is Making Sure Russia Pays For its Invasion

Despite massive attacks on its energy infrastructure, SCM is working hard to bolster Ukrainian resilience whilst fighting for justice in the European Courts.

Dec. 27, 2022

SCM is Ukraine's largest investment holding. Its business activities span power generation, mining and metal production, banking, telco, agro, retail, real estate. SCM’s sole owner and investor is Rinat Akhmetov, Ukraine’s wealthiest businessman.

In an exclusive interview with Kyiv Post, SCM’s PR Director Natalia Yemchenko reported that Russia has attacked all six DTEK power stations, while two power stations in the Zaporizhzhia and Luhansk regions remain occupied.

SCM’s asset losses have reached tens of billions of dollars, and two of its biggest steel factories, Azovstal and Illyich, are in occupied Mariupol. Yemchenko said that Akhmetov is now suing Russia in European Court of Human Rights.

Have DTEK's assets suffered badly from Russia’s missile attacks on Ukraine's energy infrastructure? If so, to what extent?

The short answer is yes. The company is responsible for 16 percent of the country's energy distribution, operating in the Donetsk and Dnipro regions; and 23 percent in energy generation, operating across various regions of Ukraine.

On Feb. 23, even before the full-scale invasion, the Luhansk power station was shelled. As of now, this station, along with the Zaporizhzhia thermal power station, are occupied by Russians and are not under DTEK control.

Since Oct. 10 this year, when Russia launched massive attacks on Ukraine's energy infrastructure, every DTEK power station [six in total] have been shelled and damaged – 20 times in total.

DTEK energy has experienced 17.8 billion Hr. (approximately $468 million) in direct losses by the end 2022. All power stations have been damaged to different extents – buildings, equipment and people. Three of our employees have been killed and 24 injured. Unfortunately, no power station in Ukraine is protected.

The Russians are destroying energy infrastructure on a daily basis, especially in the Donetsk, Kyiv regions, while the situation in Odesa is complicated. However, our energy team has managed to bring back supplies to 5.8 million households since Russia's full-scale invasion.

How have ordinary energy workers coped with the constant danger of Russian shelling?

They are heroes and they’re working on the front line. Following the de-occupation of Ukrainian territory, they are now the most important key workers after the army and emergency services. [Restoring energy supplies] is the first step to bringing back civilization in those areas.

How long will it take to restore or replace the company's damaged energy equipment? Are there any difficulties with supplies?

DTEK is one small part of an extensive power system. The most significant share in this system belongs to the state. Ukraine's power system can be fully restored only after the war.

The last attack damaged the equipment of state-owned energy company Ukrenergo. However, it is a key task of the state to provide Ukraine’s capital, Kyiv, with electricity despite the tremendous damage caused by Shahid drones, and generally to ensure that people in Ukraine receive at least a minimum amount of electricity this winter.

The situation is complicated, and the state has made huge efforts to acquire technical support and equipment from our Western partners. There is hope that we will survive. Our strategy until March is surviving with the help of our Western partners and in deep cooperation and unification with all Ukrainian stakeholders in the energy market. That is crucial.

Is the state helping DTEK?

It is cooperation. We are working in deep partnership with the state. Nobody would survive this winter as a separate entity and the Ukrainian energy system is quite integrated.

How have SCM's businesses suffered as a result of the war? What do the losses amount to in financial terms?

The war started eight years ago - we have lost a lot of assets in Donbas and Crimea. SCM filed a court case against the Russian Federation regarding the loss of our Ukrainian assets. This is not the first lawsuit against Russia for us - DTEK has previously filed a claim for the loss of Crimea Energy in international arbitration and we were expecting for a legal resolution this coming spring. However, in the context of a full-scale invasion, the deadline for the decision has been postponed.

Any crime should be punished. Russia, as a terrorist state, should be held accountable. One of the main reasons for this full-scale invasion is the absence of accountability. The Russians were never punished for the first or second Chechnya wars, nor their actions in Syria, Georgia, Crimea, Donbas, etc. It created a feeling among Russian heads that they could do it again and again, take everything they want, kill as many people as possible, and never be punished.

That is why [our owner] Rinat Akhmetov filed a case in the European Court of Human Rights. The case is firstly about financial compensation, but on a deeper level it is about far more – accountability and justice.

What is the size of the claim?

The main focus of the claim is on the loss of Mariupol assets, but it’s not limited to that. Our steel business added separate files to the case covering about 16 different assets. According to Mr. Akhmetov's statement, it runs up to tens of billions of dollars. However, as I said, money is not the main reason for this claim – it’s about justice and Russia should pay.

What is SCM's strategy during wartime? What are the company’s financial expectations for the next year?

Our main aim is victory. We have transferred 4.1 billion Hr. ($110 million) in humanitarian and military aid. We pay salaries and we are trying to save all work positions. The operation of our power and steel plants are key to supporting economic work during wartime – an important part of our resilience.

Our assets are working even near the front line in Avdiivka and Kurakhove (Donetsk region), and our steel plant in Zaporizhzhia is working and producing arms steel for ammunition. They produce around 16,000 life-saving vests for our soldiers per month. Every tenth bulletproof vest in our military is either made of our steel or purchased by SCM.

Do I understand correctly that SCM is facing losses in the energy sector, but the steel business is helping the company to recover?

Unfortunately, no. We have lost the two biggest steel plants (the Azovstal and Illyich factories which are now occupied in Mariupol). So, the biggest losses we face are in the steel business. We don't know what is going on with our assets in Mariupol. The city has been heavily destroyed.

Also, the arms steel we are now producing is not paid for. It’s pro bono for the state and to produce fortifications and bring generators and heaters to the front line. The main focus for the steel business now is to help our army.

We created a special initiative named a steel front – our team cooperates closely with the Armed Forces of Ukraine to understand the military’s needs and produce accordingly. Many foundations are buying staff, but we have another philosophy: producing and creating customized products. In particular, we have been cooperating with military intelligence and have produced special protecting capsules that act as housing for our soldiers on the front line over the winter.

The war is not over and victory is not yet here. I do believe that we must be unified with our European partners, and the U.S.

Does SCM support European Union (EU) integration policies recently approved by Parliament?

Yes, SCM is a big protagonist, supporter, and ambassador of the idea of European integration. It's not about words but about actions. DTEK was a key player in bringing the Ukrainian energy system to Europe. That process started a few years ago.

Until Feb.24, our energy system was integrated with Russia, and we were forced to discuss integration into the European energy society. Europe decided that we were ready, and now we are part of that energy society in terms of the physical connection. However, in terms of policy and regulations, we still have a long way to go.

Ukraine and DTEK could be essential for European energy security. Ukraine could provide Europe with a different kind of energy to compensate for Russian gas and oil. Yes, we need help now, but Europe also can receive a lot of input from Ukraine in the future.

As a large national business, energy is not the only area where we are big supporters of European integration. We consider such integration critical in principle - both for strengthening Ukrainian market institutions (instead of the institutions we inherited from the empire), ensuring the rule of law, and access to European markets. Yes, it means competition with European business - but we are ready for it.

As for the steel business, there are a lot of environmental regulations associated with European integration that will require investment. Is that going to be challenging?

Yes, it's challenging. However, on Feb. 16, Mr. Ahkmetov, in Mariupol with the Metinvest team, presented a $1 billion investment program focused on green steel and the modernization of our steel assets to be even more advanced than European steel companies. It would provide us with a competitive advantage.

Decarbonization of our steel business is a priority and has been before February 24. And we consider this task ambitious but feasible.

The problem is that the investment cycle in the steel industry takes a long time, and modernizing a steel plant could take five to seven years – possibly ten years. At this moment we don’t have a means of implementing these plans due to the Russian occupation. Global modernization of our metallurgical enterprises will be possible only after our victory.

Mariupol will be liberated, and we will renew and rebuild the city with modernized steel production.

What is happening with the initiative to rebuild Mariupol? Has a fund been set up for when the Russians are forced out of the city?

For us, it's very important, and the initiative's name is symbolic of Mariupol being reborn. The city council and mayor of Mariupol started the initiative due to strong requests from citizens through 11 “I am Mariupol” social centers across Ukraine. More than 50,000 people visit these centers weekly and discuss the initiative. People need hope and a vision of the city's future.

In September, SCM signed a memorandum with the city council to support this initiative as a general partner. The main task is to cooperate with different donors and initiatives.We believe that now is the time to start uniting everyone around the Marshall Plan for the Mariupol.

Why did Rinat Akhmetov decide to transfer ownership of the TV channels Ukraine and Ukraine 24 to the state? What have been the consequences of this move for Akhmetov's businesses?

First, he only transferred the licenses to the state. The equipment, studios and employees were never transferred. We closed our companies and exited from the business because, during the war, it has become impossible to sell, taking into account very specific regulations in the media sector.

Also, the state implemented an anti-oligarch bill, which we consider discriminatory, and this is our official position. However, we are working in line with Ukrainian law even if we do not appreciate it.

For us, it was not acceptable to be marked as an oligarch business, so we made this decision. It was done very fast.

Still, it was a very difficult decision. Rinat Akhmetov said that he accepted it with a heavy heart. We have been in this business for more than 20 years and invested $1.5 billion, creating the most successful and prominent media business. This formed part of our input to Ukraine's institution of free media

Where does Mr. Akhmetov live now? Is he abroad most of the time?

On Feb. 23, Mr. Akhmetov flew back to Kyiv and met with the President. I was with him at this meeting and asked him about our plans. He said that we were going to stay in Ukraine and work.


He currently resides in Ukraine and has never left since the beginning of the full-scale invasion. Indeed, he has decided not to leave until Ukraine’s victory.