How much is the Donbass?

What's the possible price of Russian expansion.
Origin source
Donetsk People's Republic (DNR), which appeared as a result of the referendum on 11 May asked Russia to include it in its composition. The Russian Federation is in no hurry to accept this offer.

Even if you ignore the factor of new sanctions against the country, the most urgent expenses only on indexation of pensions DNI population will be about 122 billion rubles. in year. It is almost 3.5 times more than the cost of Crimea pensioners. But residents of the Crimea to pay pensions, the Russian Federation will have to spend, "frozen" pensions Russians - money the federal budget reserved for possible emergency anti-crisis measures. Peninsula is still an urgent need to solve the problems with water, with electricity and with a link to the "mainland". All this requires more than 1 trillion rubles. The money the Russian government intends to deprive the regions: the first 112 billion rubles. - In the Krasnodar Territory and Yakutia, suspending construction of a sea port in Taman and the bridge across the Lena.

Four Olympics

Donetsk region, more than half of the subsidy would require federal transfers in the amount of 26.8 billion rubles. this year, and may take placeChechnya, located on the 4 th position in terms of funding, after Yakutia, Kamchatka and Dagestan.

"We Crimea, the cost Sochi Olympics -. 1.5 trillion rubles And if we add to this also the costs of Lugansk and Donetsk, already get about four Olympic Games", - said the politician Boris Nemtsov.

In terms of gross regional product (GRP) Donetsk region with 683 billion rubles. (2012), ranks second in the Ukraine, it is 11.7% of its GDP. In Russia, the Donetsk region with the GRP would take only 19th place, just after the Irkutsk region.

But the Donetsk region - the main exporter of Ukraine, every fifth dollar flows into the country due to its products. Last year, the region sold goods for $ 12.4 billion, 55.6% of them were in ferrous metals, mainly carbon steel semi-finished products. Most of them buy Russia and Italy. And it makes the region very attractive, if only the European direction of foreign trade will not destroy their EU sanctions, which accounts for a quarter of the volume of exports of Donetsk.

Dear waste coal

Donetsk region considers itself ";. Nurse "Here in Ukraine produced more than half of all coal in the country, produces 40% of the steel, fertilizer quarter, a third sinteticheckogo ammonia and sulfuric acid, and it is still the leader in the production of cast iron, finished rolled ferrous metals, pipes, electricity, etc. finally, in Donetsk lives the richest man in Ukraine - Rinat Akhmetov with a fortune of $ 15.4 billion and it is not going to leave his hometown..

In the case of Russia joining the NPT can get coal reserves of 3.4 billion tonnes. But we have their stocks of more than 200 billion tons. At the same time the cost of one ton of coal extracted in the mines of Donetsk region, higher than its price more than doubled. Thus, the cost of coal production in February 2014, according to the Ministry of Energy of Ukraine, averaged 1320.4 hryvnia per ton at the average price of coal on the domestic market in 478.9 hryvnia. In Russia, the coal production cost is lower because most of it is mined by open method of sections, rather than from the mines in the Donetsk region.

Half of the Donetsk region coal belongs to DTEK (Donbass Fuel-Energy Company) Rinat Akhmetov. The rest, almost all states havennyh mines. At 41.4 million tons DTEK accounts of 83.7 million tons of coal produced from the Ukraine. Each year, mine in Ukraine receive from the treasury about $ 2.5 billion in grants. However, the mine Rinat Akhmetov state grants do not receive, they are not at a loss. This "Ko" DTEK spokeswoman Julia Shilin.

But that's not all the problems of coal miners. In the Donetsk coal mine gas concentration the highest level, so they are the most dangerous in the world. How to solve this problem is known, but the mine owners have no money for their modernization. And the money is not there, because that world coal prices are falling: 20% in the past two years. In addition, the market is undermining the so-called Copanca or artisans. If the "Coal of Ukraine" DTEK or sell fuel at 1000 hryvnia per ton, the "Kopanka" - for 300-400 hryvnia. Unlike large manufacturers, small mines do not pay taxes, not spent on social security and using primitive tools.

It would be possible to close all mines subsidized and significantly improve the situation with the budget of the Donetsk region. Since 1996, in the process of liquidation are 56 mining companies (54 mines and two gornoobogatitelnye factory). But the process for some stretches for 17 years, did not have enough money for the restructuring of the mines. The cost of liquidating works is estimated at 4.9 billion hryvnia, or 19.6 billion rubles.

Metallurgy and sanctions

Other leading industry DNI - metallurgy, and she may lose the markets of the European Union and the United States that do not recognize the new republic. These losses can be up to 24% of the revenue from "Metinvest" Rinat Akhmetov (71.25%) and Vadim Novinsky (23.75%) in Europe. So many "Metinvest" to sell its products to European countries in 2013. And plus 3% in the US. If we were talking about 2013, the company's losses could reach $ 345.6 million.

Finally, the supply of steel in Europe, primarily in Italy, as well as the export of large-diameter pipes for the French gas company Gaz de France, gas transmission companies SPP AS Eustream SA (Slovakia) and Steweag-Steg GmbH (Austria). These pipes produces Khartsyzsk Pipe Plant. Russia also in 2006 she began to make such pipes at a number of plants.

Sanctions can touch and "Donetsksteel" Russians Viktor Nusenkis. His Donetsk Steel sells steel43 countries around the world, including Europe.

Steel production in the Donetsk region is 13.3 million tons (data from 2013), in Russia - 68.8 million tons. Russian steel imports, including those from the Donetsk region. Joining the DNI would remove the problem of shortage of steel, but the possible benefits could be wiped out due to rupture of internal corporate communications in the "Metinvest".

The fact is that in the case in the Donetsk metallurgical joining the NPT in Russia will increase logistics costs, as would have to pay export duties. Three ore processing plant "Metinvest" are outside the Donetsk region - in Krivoy Rog, in the Dnipropetrovsk region. It Ingulets Mining - the largest producer of iron ore in Ukraine, he gives 77% of the national volume; Northern Mining (20% of iron ore in Ukraine) and Central GOK (6 th place in Ukraine on the volume). These GOK ore purchases and "Donetskstal", and the other less significant players. Dnipropetrovsk region under the guidance of master PPG "Private" Igor Kolomoisky billionaire plans to reunite with Russia has not. Furthermore, Mr. Kolomoiskyadjusted sharply anti-Russian. He offered "$ 10 000 for a Muscovite" (for the capture of those terrorists Kyiv calls) and advised to buy tickets on the move in Russia all regions of Ukrainians wishing to enter into the Russian Federation.

IR Eavex Capital analyst Ivan Dzvinka likelihood of disconnection of the Donetsk region of Ukraine called mythical.

"Akhmetov separation to anything, maybe he needs more decentralization of Kiev He GOK are in the Dnipropetrovsk region, and if the NPT is disengaged from the Ukraine, it will have to import iron ore." - Explains Ivan Dzvinka.

Donetsk region produces 40% of national steel output. But even if there were no sanctions against the DNI, the market situation in 2014 deteriorated to Donetsk Region thronging China, which became in 2014 the largest steel exporter in the world. If the largest enterprises of the region - Ilyich Iron and Steel Works of Mariupol, metallurgical combine "Azovstal", Yenakiyevo Steel Plant, Khartsyzsk Pipe Plant, belonging to the group "Metinvest" Rinat Akhmetov and Vadim Novinsky, they flourish, increasing approxyl (in 2013 it amounted to $ 1.026 billion) and investment is the largest field of Metallurgical Plant - Makeyevka named after SM Kirov - bankrupt. In the same state remains Kramatorsk Metallurgical Plant named after VV Kuibyshev, belongs to the group of "Industrial Union of Donbass" (ISD), Sergei Taruta, the governor of the Donetsk region, Oleg Mkrtchyan and Russian businessman Alexander Katunina (one of the "Evraz" founders). On the recovery of these companies will require billions of dollars. And it is also a challenge for the authorities of the DNI or Donetsk region.

In anticipation of unknown future

The risk of possible EU sanctions and exports is DTEK's electricity, supplying energy in Poland and Hungary. The share of exports in the total volume of DTEK's generation is more than 18.5%. On the question do you expect sanctions from the European Union in the case of consolidation of the Donetsk People's Republic of autonomy, a spokesman for DTEK Julia Shilin said: "On the EU sanctions is better to ask the EU I sincerely hope that by the Authority does not reach case Decentralization of power - that's.. that might help solveituatsiyu ".

Meanwhile, the effects of the political crisis have already taken place: in late February, the Swiss prosecutor's office raided the Geneva office of the company DTEK Trading SA Rinat Akhmetov. Swiss investigating authorities are investigating the activities of the coal trading company Mako Trading SA, which is owned by the eldest son of the ousted Ukrainian President Alexander Yanukovych. Swiss police suspect Akhmetov money laundering: its business is closely connected with the company Yanukovych Junior.

Rinat Akhmetov - the "boss" of Donbass and the main sponsor of the Party of Regions of ousted Ukrainian President Viktor Yanukovych. a businessman holding a "System Capital Management" (SCM) has more than hundreds of companies and includes not only DTEK and "Metinvest" with coal production, electricity, iron, pipes, rails, etc., but also banks, insurance and telecommunication companies, media, commercial real estate and so on. The total turnover of the SCM $ 23.5 billion (in 2012).

Although Rinat Akhmetov says he is for that Donetsk region remained a part of Ukraine, its position in relation to thethe Events in the Donetsk region is open to criticism as the supporters of a unified Ukraine and the supporters of accession of Russia to the Donetsk region. Several times the offices of his companies pro-Russian citizens picketed and demanded to join them. A few days ago the self-proclaimed governor of the Donetsk region Pavel Gubarev said that two-thirds of the militia (or the separatists, in the language of Kiev) received financial assistance from Rinat Akhmetov. Akhmetov called word Gubarev lie.

Today workers "Metinvest" patrol the city of Donetsk region, helping police to keep order on the streets. His slurred position of Rinat Akhmetov, in fact, supported the existing status of the Donetsk region "between the" Ukraine and Russia.

The fate of the Donetsk region will be decided by politicians. But the motivation of the Russian leadership, of course, will influence and economic considerations. Meanwhile, the benefits of a possible merger of Donbass will come only in the very long term. In the short term, by connecting Donbass, Russia will gain a lot of problems and reasons for the charges. It seems that RussiaENGLISH budget simply will not sustain such a load.