Businessman Rinat Akhmetov: Russia Owes $20 Billion in Damages
Ukrainian businessman Rinat Akhmetov has spoken out about the unprecedented damage to Ukraine's infrastructure caused by Russian attacks over the past three months; much of the destruction has been aimed at his facilities.
Recently, Rinat Akhmetov went public with a lawsuit against the Kremlin for $10 billion, as reported by his company's media representatives.
Rinat Akhmetov is the founder of System Capital Management Group, a holding company for Akhmetov's enterprises. SCM Group is an umbrella for 500 companies, including some of the country's top producers of steel, power, and other vital resources, and employs about 200,000 people. Flagship mining and metallurgical producer Metinvest is the largest of these companies.
Damages to Rinat Akhmetov's Enterprises
Due to the Russian military's relentless bombardment, a number of SCM Group businesses have been partially or completely destroyed or mothballed, including the Azovstal plant, Ilyich Iron and Steel Works, the Avdiivka Coke Plant, the Luhansk thermal power plant, and dozens of other industrial infrastructure and green energy facilities. In recent interviews with Italian RAI TV and Ukrainian news portal mrpl.city, Akhmetov expanded on his earlier comments by stating that SCM Group's industrial assets destroyed or mothballed exceeded $20 billion. "Painstaking legal work on these issues is already being actively carried out. We will file claims in all international and national instances," he said. "The final amount will be determined in a statement of claim against Russia." When facilities are mothballed, they are effectively decommissioned for their protection; in this case, this was due to the inability to operate in such dangerous conditions and the need to evacuate.
Notably, the Southeastern seaport city of Mariupol has been reduced to rubble. Mariupol is home to Azovstal and Ilyich steel plants, both owned by Metinvest, with a typical annual production of 10 million tons of steel. Recently released aerial footage appears to show munitions falling from Russian warplanes and exploding on impact around the Azovstal plant. In addition to the infrastructure of the plants themselves, Akhmetov told the press there were raw materials and finished products worth $1 billion at these sites.
"We will definitely file claims against Russia, demanding compensation for all losses caused by Russian military aggression," Akhmetov said in a company press release.
In addition to Mariupol, the Russian army fired missile attacks on Kryvyi Rih district in Dnipropetrovsk Oblast. Akhmetov and his colleagues have been carefully watching developments in this region since Ukraine's armed forces warned it could become a target. The Kryvyi Rih district in central Ukraine is home to several steel assets, including some owned by one of Akhmetov's holding units, Metinvest Kryvyi Rih.
Financial Impact on Akhmetov
According to the Bloomberg Billionaires Index, Rinat Akhmetov's net worth has been severely hurt by the destruction of his assets. His worth has fallen approximately 40% to $6.93 billion since the war began. Despite this major blow, Metinvest continues to pay salaries to employees who have evacuated or fled to safety and has also been buying out its own debt from the capital market due to depreciation.
Since the start of the year, Akhmetov has transferred approximately $100 million to the Ukrainian government to help maintain reserves, support the armed forces and carry out humanitarian missions. Supporting emergency operations is his focus at the moment.
The Broader Economic Impact
Production of steel and iron in the region is crucial to the national economy. As of 2013, production in this region accounted for 40% of all of the country's steel. The iron and steel sector accounts for nearly 10% of the country's gross domestic product. Metinvest is also the primary exporter to other European states. Halting operations has put pressure on Europe's vulnerable commodities markets, which are now suffering from the shortage of supplies from Ukraine. According to Metinvest's chief executive Yuriy Ryzhenkov, prior to the invasion they exported about half of all products moving to the EU and the U.K.
Moving Forward
When asked by mrpl.city how his companies will invest moving forward, Rinat Akhmetov assures that a robust recovery mission has already begun.
"We have two key priorities: restoring industrial potential and ensuring energy independence."