Silicium Kazakhstan to reopen after scandalous shutdown08 july 2014, 19:09
Silicon production plant Silicium Kazakhstan that was haunted by scandals and huge debts almost since its establishment, may be able to finally resume production by the summer’s end, Tengrinews reports.
Silicium Kazakhstan plant worth around $170 million was constructed by Russian Titan group of companies in 2008. Titan invested $30 million of its own funds, but all the rest of the funding was borrowed. $63 came from the Development Bank of Kazakhstan. Kazakhstan's BTA bank was another major creditor of the project.
The plant was 59 percent owned by Russian Titan and 25 percent owned by Russian Silarus, both these companies belonged to Sutyaginsky brothers Alexander and Mikhail. The remaining 16 percent in the plant was owned by German Thyssen Krupp.
The Karaganda-based plant started working in 2010 and reached its design capacity of 25 thousand tons of silicon a year in 2012. It was exporting silicon to Germany for two years even though financially the deal looked obviously flawed. The prime cost of the silicon made $3000 per ton for the plant, but ThyssenKrupp was purchasing it at $1200–1300 per tone.
The plant's creditors were allegedly not aware of its losses, because the first two years were the grace period and the plant was not supposed to make any payments on its debts. However, once the grace period was over the plant was temporarily shut down in February 2013 amid a scandal over misuse of borrowed funds by top managers of the enterprise.
In March 2013, the plant's Director General Alexander Sutyaginsky was arrested and charged with organizing a contract killing of a Kazakhstani businessman Mikhail Garkushkin, head of Basco LLP. He was found guilty of the crime and sentenced to 12 years in prison. After that the creditors demanded early repayment of the plant's debts citing the charges as a credit event.
All the Silicium Kazakhstan property was arrested since its land and buildings had been put up as collateral for the loans of the Development Bank of Kazakhstan and its equipment had been put up as collateral for BTA bank. All this put the plant on the verge of bankruptcy.
Shortly after that Judge Kulpash Utemisova changed Alexander Sutyaginsky's sentence from 12 years in prison to a 6-year suspended sentence. The businessman was released on bail and fled. The court of cassation overruled Utemisova’s judgment and launched a criminal case against the judge. She was later sentenced to 4.5 years of imprisonment.
In August 2013 the Development Bank of Kazakhstan transferred the Silicium Kazakhstan project along with its debts to Investment Fund of Kazakhstan, a subsidiary of state-run Baiterek Holding. The Investment Fund was created to maximize return on investments in Kazakhstan and attract investors.
The project to revive Silicium Kazakhstan plant started in the beginning of the year when the investment Fund and Tau-Ken Samruk mining company signed a memorandum worth $6.5 million. This was the amount of investments that the company promised to inject into the plant. However, Tau-Ken Samruk is considered a temporary investor, not a strategic one.
“A technical audit of the plant's equipment has just been finished. It was conducted by German Thyssen Krupp. The company confirmed that the plant's furnaces are in working order. We want to restart the plant this year because it cannot withstand another winter,” the Deputy Akim of Karaganda Oblast Anuar Akhmetzhanov said.
Before the shut down, Silicium Kazakhstan employed about 400 people. Now there are jobs only for 100 people. Most of those who lost their jobs to the scandal have already found new ones elsewhere. But the plant promised to hire back all of its former employees willing to return after the production would be restarted.
Writing by Dinara Urazova and Gyuzel Kamalova, editing by Tatyana Kuzmina