Ocean Plaza, DemGOK and MGOK: why privatization of topographic objects is stuck in courts

16 May 17:13

The State Property Fund of Ukraine (SPFU) has suspended the privatization of three significant assets: the Ocean Plaza shopping and entertainment center in Kyiv, the Demurinsky Mining and Processing Plant (GOK), and the Mykolaiv Alumina Plant (MGZ). Ivanna Smachylo, acting head of the State Property Fund, said this in an interview with Mind, "Komersant Ukrainian" reports.

The reasons were significant debt obligations and complex litigation related to these enterprises.

Ocean Plaza: debts exceed the value of the asset

The SPFU owns a 66.65% stake in Ocean Plaza LLC. However, the company has debt obligations to the state in the amount of more than UAH 9 billion, which exceeds its estimated value of approximately UAH 5 billion. These debts were previously owed to an offshore company, but have now been transferred to the state.

According to Ivanna Smachylo, selling the property without resolving the debt issue would put a potential buyer in a difficult position. Nevertheless, Ocean Plaza LLC has already begun to repay its debts: in the first four months of 2025, UAH 1.4 billion was transferred to the Fund for the Elimination of the Consequences of Armed Aggression.

What you need to know about Ocean Plaza shopping center

Ocean Plaza is one of the largest shopping and entertainment centers in Kyiv, located at 176 Antonovycha Street. Opened in November 2012, it has a total area of 165,000 m², of which 70,000 m² are available for lease. The center has more than 420 shops, about 40 restaurants and cafes, a hypermarket, a cinema, a 350,000-liter aquarium, and underground and outdoor parking for 1,200 cars.

In July 2023, the High Anti-Corruption Court nationalized Avangard-Vilarti, which owned 66.65% of Ocean Plaza. This stake was transferred to the State Property Fund of Ukraine (SPFU), which was tasked with privatizing the asset. The remaining 33.35% is owned by businessman Andriy Ivanov through the Integrity Capital fund.

Privatization is complicated by the mall’s debts. In particular, the debt to Ethoder Investments Limited, a company associated with Arkady Rotenberg’s family, amounted to $148 million in principal and $67.6 million in interest. In September 2024, the HACC upheld the claim of the Ministry of Justice, imposing sanctions on Rotenberg and others, and recovered the rights to the loan to the state.

As of today, Ocean Plaza continues to operate, offering visitors a wide range of shops, restaurants and entertainment venues.

Demurinsky GOK: legal obstacles

Demurinsky GOK, formerly owned by Russian billionaire Mikhail Shelkov, was transferred to state ownership in 2023. However, the company has a sanctioned loan that prohibits payments until the end of the legal proceedings. In addition, the plant’s assets were transferred to the SPFU separately: corporate rights, movable and immovable property. This has complicated the process of preparing for privatization, as each asset requires a separate valuation and lifting of arrests.

What is happening to Demurinsky GOK now

Demurinsky Mining and Processing Plant (DemGOK) is a strategic enterprise of Ukraine specializing in the extraction and processing of titanium and zircon ores. Located in the village of Novoandriivka, Dnipropetrovska oblast, the plant develops the Vovchanske deposit, which has estimated reserves of 5 million tons of raw materials with a heavy mineral content of about 9%.

Established in 2001, DemGOK was long controlled by Russian oligarch Mikhail Shelkov, a shareholder in VSMPO-Avisma. In 2023, the company was nationalized by the decision of the High Anti-Corruption Court of Ukraine as part of the sanctions policy against sanctioned persons.

In 2024, DemGOK incurred a net loss of over UAH 113.8 million, almost twice as much as in 2023. Despite this, the company’s revenues increased from UAH 93.3 million to UAH 218.6 million. As of the end of 2024, the plant’s accounts payable amounted to UAH 148.5 million, including UAH 53.6 million for goods and services, UAH 6.7 million to the budget and UAH 1.8 million in wages.

After nationalization, the plant resumed production activities. In particular, since the end of May 2024, 169 thousand cubic meters of ore sand have been mined and 321.5 thousand cubic meters of stripping work has been carried out. In February 2025, the State Property Fund of Ukraine reported that the company was operating on the remains of raw materials, including 100 thousand tons of stacked ore sands.

In July 2024, the Cabinet of Ministers of Ukraine included DemGOK in the list of large-scale privatization objects. However, the auction was delayed due to debt obligations to the sanctioned companies Limpieza Limited (Cyprus) and PJSC VSMPO-AVISMA Corporation (Russia), which were subsequently recovered by the state by decision of the HACC.

Demurinsky GOK is one of the five largest privatization targets scheduled for 2024. Its maximum production capacity is 400-500 thousand cubic meters of ore per year. The company may be of interest to investors, particularly given the strategic importance of titanium raw materials for the aviation and defense industries.

Mykolaiv Alumina Plant: hundreds of arrests

Mykolaiv Alumina Plant, which was nationalized in 2023, has also faced difficulties. The enterprise, formerly controlled by Russian oligarch Oleg Deripaska, has hundreds of separate assets, each of which is subject to separate court proceedings and the lifting of arrests. This significantly delays the process of preparing the plant for privatization. According to Ivanna Smachylo, the sale of MGZ will not take place before the summer of 2025 due to lengthy litigation.

Mykolaiv Alumina Plant: context

Mykolaiv Alumina Plant (MGZ) is a key non-ferrous metallurgy enterprise in Ukraine and one of the largest alumina producers in Europe. Located in the village of Halytsynove, Mykolaiv region, the plant was founded in 1977 and started production in 1980.

Before the outbreak of the full-scale war, MGZ produced up to 1.7 million tons of alumina per year, which was approximately 20% of Rusal’s global production. The alumina produced by the plant is the main raw material for aluminum production, which makes MGZ strategically important for the steel industry.

In the 2000s, Russian oligarch Oleg Deripaska gained control of the plant through Rusal. In 2024, as part of Ukraine’s sanctions policy, the High Anti-Corruption Court decided to nationalize MGZ. on March 20, 2024, the company was transferred to the management of the State Property Fund of Ukraine.

After the outbreak of war in 2022, the plant suspended production due to logistical problems and the risk of shelling. Currently, MGZ is managed by the state and the possibility of its privatization is being considered. However, the plant’s resumption of full operations depends on the stabilization of the situation in the region and the resolution of environmental issues related to sludge storage facilities.

MGZ has been repeatedly criticized for environmental violations. In particular, in 2021, the court ordered the plant to pay UAH 9.2 billion in compensation for damage to the environment and health of residents due to red sludge pollution.

Mykolaiv Alumina Plant remains an important asset for the Ukrainian economy, and its future depends on effective management and resolution of the existing problems.