When CC Metals & Alloys (CCMA) halted operations in July, some employees on the 70-year-old plant in western Kentucky anticipated to be again on the job by the brand new yr.
In any case, the manufacturing unit — which produces an alloy of iron and silicon for the boom-and-bust metal trade — has reduce output and laid off staff throughout robust occasions over the many years, solely to fireside up idled furnaces and name employees again after just a few months.
So for some staff of the plant owned by Ukrainian tycoon Ihor Kolomoyskiy and his enterprise companion Hennadiy Boholyubov, it got here as a shock when union leaders at CCMA knowledgeable them final month that many of the remaining employees could be laid off in December — even because the ferroalloy market reveals indicators of rebounding from a pointy COVID-19 stoop.
“The general public which were laid off in July ain’t even been on the lookout for a job” as a result of they assumed they’d be again on the plant quickly, one employee advised RFE/RL by phone, talking on situation of anonymity as a result of the brand new job cuts haven’t been publicly introduced.
The clouded way forward for CCMA and its employees is one other twist within the greater than 10-year-old story of Kolomoyskiy’s enterprise actions in the USA, the place he and Boholyubov built a steel business worth hundreds of millions of dollars but lost it by 2017.
Phrase of the extra layoffs got here months after the U.S. Justice Division accused Kolomoyskiy and Boholyubov of buying U.S. actual property and companies with cash embezzled from their Kyiv-based financial institution in 2008-16.
The allegation, which the 2 tycoons deny, stems from a continuing investigation by the FBI — a division of the Justice Division — into suspicions of cash laundering.
The present shutdown could also be unprecedented, Stan Burkeen, a retired CCMA worker and union president whose father started working on the plant shortly after it opened in 1949 alongside the Tennessee River in Calvert Metropolis, Kentucky, advised RFE/RL.
Growth And Bust
“It has at all times operated. Even when the value of steel was low, it will nonetheless run. They simply would possibly shut off one or two furnaces till the value went again up. However I’ve by no means identified them to close each line down,” stated Burkeen, who retired in 2018 after a quarter-century on the job.
It has at all times operated. Even when the value of steel was low, it will nonetheless run. They simply would possibly shut off one or two furnaces till the value went again up. However I’ve by no means identified them to close each line down.
Now, the one factor buzzing on CCMA’s sprawling grounds is a Bitcoin-mining operation, staff say — a warehouse filled with computer systems which might be churning out cryptocurrency whereas the manufacturing unit’s conventional manufacturing is idled.
When that is likely to be restarted is unclear, present and former staff say, partially as a result of the momentary collapse in ferroalloy demand prompted by the pandemic shouldn’t be the one cloud hanging over CCMA.
Some employees suspect that the regulation enforcement stress confronted by Kolomoyskiy and two Miami-based U.S. associates who run CCMA, Mordechai Korf and Uriel Laber, could also be the primary cause for the obvious lack of plans to restart the plant. Monetary issues at Kolomoyskiy’s different U.S. firms might doubtlessly help such hypothesis.
“They’re going to lay off extra folks and that’s all we all know,” the employee who spoke on situation of anonymity advised RFE/RL on December 2. “The plant administration do not even know nothing. Miami is simply retaining every little thing hush-hush.”
On August 4, the FBI raided the associates’ Miami headquarters and their real-estate administration workplace in Cleveland, Ohio, the place they personal a number of properties.
Two days later, the Justice Division filed a civil lawsuit accusing Kolomoyskiy and Boholyubov of buying U.S. belongings with cash “misappropriated” from Kyiv-based PrivatBank, which was the tycoon’s foremost funding automobile till it was nationalized in 2016.
The Justice Division claims the tycoons have been assisted in these alleged actions by Korf and Laber, who oversee all their U.S. belongings.
A spokesman for Korf and Laber declined to touch upon any plans for layoffs at CCMA or different features of the plant’s future, together with its sale.
High Tycoon
Kolomoyskiy has ties to President Volodymyr Zelenskiy and returned from self-imposed exile shortly after Zelenskiy’s election in 2019.
The U.S. Justice Division claims that Kolomoyskiy and Boholyubov fraudulently loaned themselves cash from PrivatBank in 2008-16 and laundered it by way of shell firms earlier than buying U.S. belongings with the assistance of Korf and Laber.
The tycoons deny the accusations and declare they bought the U.S. belongings with about $2 billion they obtained from the sale of their Ukrainian metal enterprise within the late 2000s. Korf and Laber additionally deny any wrongdoing.
The lawsuit filed by the Justice Division in August is searching for the forfeiture of two industrial buildings – one in Kentucky and one in Texas — that the tycoons bought throughout their years-long U.S. shopping for spree.
These proceedings have been delayed just a few weeks as Korf, the 48-year-old CEO of CCMA and the real-estate belongings, suffered an obvious seizure on November 16, in response to court docket filings and Miami Seaside Fireplace Division information obtained by RFE/RL.
The FBI continues to be conducting its investigation into the Ukrainian tycoons and their two U.S. associates, Particular Agent Vicki Anderson-Gregg advised RFE/RL on December 2. She declined to touch upon whether or not regulation enforcement was trying into particulars in regards to the buy of CCMA.
Kolomoyskiy and Boholyubov purchased CCMA for about $188 million in March 2011, when ferroalloy costs have been close to document highs.
Alloys To Crypto
CCMA is considered one of solely three U.S. crops producing ferrosilicon, an alloy of iron and silicon that’s primarily used within the manufacturing of metal to boost its energy. The corporate’s three furnaces have an put in capability of 100,000 metric tons.
The plant final yr produced an estimated 70,000 tons, accounting for roughly 40 p.c of U.S. ferrosilicon manufacturing and 20 p.c of U.S. consumption, in response to Kevin Fowkes, an trade knowledgeable at AlloyConsult.
CCMA had largely been a worthwhile enterprise over the previous a number of many years, present and former staff advised RFE/RL, although it has confronted manufacturing slowdowns and layoffs once in a while, most just lately in 2015.
Present and former employees say they consider the Ukrainian tycoons mismanaged the plant by altering its enterprise mannequin and making an attempt to run it from Miami reasonably than domestically, because the earlier homeowners had finished.
A number of years in the past, the corporate shut the smallest of the three furnaces, which produced specialty alloys, the employees stated. Consequently, the plant started nearly completely making essentially the most customary ferrosilicon product.
“From my expertise, that plant cannot make it on simply that one product alone,” stated Burkeen, who additionally alleged that the corporate “hasn’t run as easily” because it did earlier than the tycoons purchased it. Nonetheless, trade analysts say U.S. demand for specialty alloys has been damage in recent times by steel-plant closures, suggesting a doable sensible cause for the choice.
In the meantime, the homeowners turned to a brand new income to offset the weak alloy market — cryptocurrency. A couple of years in the past, the warehouse that had saved the specialty alloys was revamped and stuffed with a whole bunch if not 1000’s of computer systems to mine cryptocurrency, present and former staff say.
“They have been bringing [computers] in by the truckload,” an worker of the plant advised RFE/RL on situation of anonymity as a result of he isn’t licensed to discuss plant actions.
There are about 170 households, give or take, that rely upon that place and that isn’t mentioning the truck-driving households and the warehouse folks. It’s a crucial supply of jobs on this space.
The cryptocurrency operation is run independently of the plant and has not been affected by the shutdown, the employees stated.
A spokesperson for Korf and Laber advised RFE/RL in July that CCMA invited a 3rd social gathering to host an information heart on its property specializing in synthetic intelligence (AI) and blockchain as a solution to diversify earnings. The spokesperson didn’t disclose the third social gathering nor the monetary particulars of the internet hosting settlement.
“Each AI and blockchain are energy-intensive industries and are anticipated to develop exponentially to a $20 billion market within the subsequent decade. Primarily based on the success of the preliminary pilot program we could improve this enterprise line. Having a number of income streams is prudent for CCMA,” the spokesperson stated in a reply to RFE/RL.
Blockchain is a expertise used to course of cryptocurrency transactions.
The cryptocurrency information heart on the grounds of CCMA is only one of at the very least 5 which have popped up within the Tennessee Valley in recent times due to the area’s considerable provide of low cost energy. Cryptocurrency “mining” is an energy-intensive enterprise and requires low pricing to be worthwhile.
170 Households
This yr, because the coronavirus devastated the U.S. economic system, CCMA introduced in late June that it will shut all manufacturing and lay off greater than 80 plant employees — about 77 p.c of the workforce — on July 1 for an “unforeseeable time period.”
The corporate stated that the federal government shared blame for the shutdown, accusing it of permitting a flood of low cost imports that pushed costs decrease.
Since reaching a low level in July, ferrosilicon costs have slowly risen over the previous few months.
Amy Bennett, principal marketing consultant at Fastmarkets, a metals trade pricing and information service, advised the Worldwide Ferroalloys Convention on November 9 that she anticipated ferroalloy prices to pick up in 2021 as metal demand recovers from the pandemic.
The rosier outlook is leaving some employees questioning why CCMA is laying folks off reasonably than calling them again. The lengthy shutdown has fueled suspicions amongst employees and others in Calvert Metropolis that the tycoons could also be searching for, for a second time, to promote the plant.
In 2017, Kolomoyskiy sought to promote CCMA to a Russian firm to be able to stave off the loss of his U.S. steel business, which filed for chapter the earlier yr, an RFE/RL investigation confirmed.
However throughout a required interagency evaluate, the Justice Division raised questions on the place the proceeds would find yourself, folks accustomed to the problem advised RFE/RL. The homeowners declined to reply these questions, they stated, and the deal was by no means authorized.
If the Ukrainian tycoons are aiming to promote, Burkeen stated he hopes that the U.S. authorities will enable it and {that a} new proprietor will restart manufacturing.
“There are about 170 households, give or take, that rely upon that place and that isn’t mentioning the truck-driving households and the warehouse folks. It’s a crucial supply of jobs on this space,” he stated.
