Russia’s attack on Ukraine has complicated the supply of ilmenite to the Precheza company in Přerov for the key production of titanium white, as the chemical plant has been purchasing a substantial part of this raw material from Ukrainian companies for a long time. After the outbreak of the war, it is more difficult to transport ilmenite from Ukraine by rail. Because of this, Precheza is looking for his replacement supplier. However, international sanctions imposed on Russia should not significantly affect the revenues of Precheza, which receives only a few percent of its sales in Russia and Ukraine, according to Precheza CEO Ivo Hanáček.
According to Hanáček, due to the war in Ukraine, supplies of ilmenite from local suppliers are stuck. “The failure of purchases of ilmenite from Ukrainian sources can be partially replaced by supplies from other regions, which our company is working on intensively. We currently have a five-month supply of Ukrainian ilmenite, so we have some time to secure replacement supplies,” said Hanacek. In the past, Precheza bought tens of thousands of tons of ilmenite per year in various parts of the world, such as Norway, Mozambique and India.
Precheza’s maximum annual production capacity is 62,000 tons of titanium white, 11,500 tons of ferrous pigments, 40,000 tons of ferrous sulfate monohydrate and 220,000 tons of sulfuric acid. Titanium white accounts for about 88 percent of Precheza’s total sales. Titanium white is used in the production of paints, plastics, paper, man-made fibers and in the food industry.
Hanáček is not afraid of the significant impact of the war on the sales of Precheza, which exports 90 percent of its production. “Precheza’s share of sales in the regions of Russia and Ukraine represents less than four percent of total sales, so it is realistic to replace this possible shortfall by increasing sales to other regions,” says the director.
According to Hanáček, the war and the associated sanctions imposed on Russia should not affect the prices of titanium white on world markets either. “Russia is not a major exporter or consumer of titanium white. Its isolation should not significantly affect the prices of titanium white,” Hanacek said.
In 2020, Prechez’s chemical plant Precheza’s net profit fell by a quarter to CZK 702 million from CZK 949 million in 2019. Precheza’s revenues fell by four percent to CZK 3.748 billion from a record CZK 3.893 billion. Prechez will not publish last year’s results until the annual report is published. “In the year-on-year comparison, the expected economic result decreased due to the monthly planned shutdown of production, a strong koruna exchange rate and an increase in raw material and energy prices. Revenues were maintained at the level of 2020,” said Hanáček.
Precheza is the largest producer of inorganic pigments in the Czech Republic, employing about 650 people in Přerov. Chemička belongs to the Agrofert Group, which in February 2017 was invested by former Prime Minister Andrej Babiš (ANO) in trust funds.
Source: Precheza and CTK
