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Overview of Donetsk Oblast

The Donetsk oblast was formed on July 17, 1932. It is a large industrial center of Ukraine. The oblast is situated in the southeastern part of Ukraine. In the east it partially borders on the Russian Federation. In the south the oblast has access to the seas of the Mediterranean basin. The oblast stretches for 240 km from north to south and for 170 km from east to west. It covers the area of 26,500 sq. km, which is equal to 4.4% of the total area of Ukraine.

The oblast has a continental climate characterized by hot and dry summer and relatively cold winter with unstable snow cover.

There are picturesque places and medicinal deposits in the oblast. The Slaviansk salt lakes and mineral water springs are of balneological significance. There are two reserves of the national value in the oblast: the Khomutovska steppe and the Sviatogorie. The Soledar salt mine has unique natural treatment properties, and a speleological health-improvement resort has been established near it. The Azov Sea coast is the recreational area unsurpassed for its health-improvement effect.

Fertile black (chernozem) soils contribute to the oblast’s wealth.

The region is also rich in natural resources, such as black coal (its reserves are estimated at about 25 billion tons), rock salt, limestone, potassium salt, mercury, asbestos, graphite, etc.- altogether about 100 varieties, iron ore and rare-earth elements included.

The availability of the oblast’s own fuel and energy resources, minerals and raw materials in the oblast, proximity of the Kryvyi Rih iron ore deposit, and access to the sea have conditioned development of a powerful industrial complex with high concentration of heavy industries, establishment of a well-developed industrial, scientific, and social infrastructure, and the high level of urbanization.

The oblast manufactures one fifth (20%) of the Ukrainian gross domestic product. It is among the leaders as for the output of a number of major industrial and agricultural products, as well as for the exports volume.

The Donetsk oblast has the largest population in Ukraine. Over 5 million people of 90 nationalities (10% of Ukraine population) reside on its territory. The population density is about 190 persons per 1 sq. km, the share of urban population is 90%. The administrative territorial structure of the oblast is composed of 28 cities and towns and 17 districts of the oblast subordination.

835 industrial enterprises, about 15,000 small businesses, over 500 agricultural enterprises, over 500 specialized construction organizations, and over 2,000 farms form the oblast’s economic potential.

The economy of the oblast is served by 134 banks, including subsidiaries of commercial banks from other regions, 17 insurance companies, and 24 exchanges.

There is a developed transportation system in the oblast. The largest in Ukraine Donetsk Railway accounts for up to 40 % of the national railway transportation volume.

The Mariupol sea port on the Azov Sea with the annual cargo handling capacity of 12 million tons serves external economical operations with many countries of the world.

There is an international airport in Donetsk. Secondary airports for freight and passenger transportation are situated in Mariupol and Kramatorsk.

The oblast has an extensive network of national and local motor roads.

In big cities there are hotels with high quality services provided.

The Donetsk oblast has modern communication facilities.

The oblast’s industrial complex includes fuel-and-energy, chemical and metallurgical, agricultural sectors and a set of sectors producing consumer goods.

The enterprises of the oblast have the necessary network of access railroads, local highways, warehouses, power facilities, and other production infrastructure objects.

In the course of the economic reform the forms of ownership have changed in many industries. Private share capital has emerged.

There are 15,400 (15% of the all-Ukrainian number) small businesses functioning in the oblast. They employ 7% of the oblast manpower and provide 20% of the budget tax revenues.

Small business sales account for 15% of the total sales volume in the oblast.

Every other enterprise is involved in trade, 13% of small businesses have industrial orientation, 10% are active in construction.

State-owned companies prevail in power engineering and fuel industries.

Fuel industry is represented by 101 mines, 12 mine-building production associations, and 33 central concentrating mills. The annual production capacity of the coal extracting enterprises is 57.5 million tons. The balance stock of coal in the oblast is 20 billion tons, including 10.7 billion tons of coking coal. The process of shutdown of unprofitable mines is under way in the oblast. In 1998, 45.8 million tons of coal (about 60% of all-Ukrainian amount) were extracted.

Geologists of the oblast have made the necessary provisions for construction of 16 mines with the total capacity of 35.2 million tons, including 8 mines for coking coal extraction (16 million tons).

Effort is made to find the ways of using coal for production of liquid fuel of fuel-oil-free burning, aluminium-ferrosilicate alloys, etc.

It is envisaged to process of coal waste dumps formed for the years of mine working.

Power sector is represented by a unified complex of generating, supply, and maintenance enterprises. The installed capacity of the 7 thermal power plants is over 10,000 MW, which is enough to satisfy the oblast’s internal demand for power and supply power beyond the region’s borders.

Ferrous metallurgy sector includes 3 largest metallurgical industrial complexes, 4 metallurgical plants, 2 plants of metal products, a pipe-making plant, a pipe-casting plant, and a metal-rolling plant. This complex also includes 7 powerful chemical-recovery plants, 3 mining enterprises, and 10 companies manufacturing fireproof materials.

Cast iron, steel and rolled metal annual production capacities in the oblast amount to 17.4, 21.5, and 16.4 million tons respectively. The basic range of products manufactured includes foundry and re-rolling iron, rolled metal of various shapes, pipes, steel cords, etc.

The share of exports in the total oblast’s output is over 70%. The metal products are exported to more than 50 countries.

Non-ferrous metallurgy enterprises of extreme importance for Ukrainian economy are concentrated in the oblast. This sector includes 4 companies processing secondary metals. About 20% of the products are exported.

The chemical industry of the oblast includes 15 companies of various specialization. They produce mineral fertilizers, plastics, soda, acids, explosives, and household chemicals.

There are capacities for annual production of 1.3 million tons of ammonia, 850,000 tons of carbamide, 220,000 tons of ammonia saltpeter, 900,000 tons of sulphuric acid. The major part of the products is exported, its share in the oblast’s exports volume is 7%.

The 234 machine-building companies of the oblast satisfy the domestic demand for tunnel-mining equipment, mine hoist machines, purification and tunneling combines completely; that for rolling equipment – by 91%, for railway freight cars – by 76%, and for blast-furnace and steel-smelting equipment – by more than 44%.

A powerful construction complex has been created in the oblast. It includes 508 construction contractors, 89 construction and renovation enterprises, 37 survey and development organizations, and over 100 enterprises producing construction elements and materials. Over 1,500 small businesses function in this sector.

Almost all the production facilities, residential buildings, social and cultural sphere objects in the oblast have been constructed by the specialized contractors. The latter also provide construction and mounting services at the international market.

Agricuture. The area of the oblast’s agricultural land is about 2 million hectares, including 1.6 million hectares of arable land. The share of individual landowners and farmers in the agricultural production is 40%. The rest is produced by collective agricultural enterprises. The agricultural manufacturers of the oblast specialize in producing grain, oil-bearing crops, vegetables, melons and gourds, as well as breeding livestock, hogs, and poultry.

The food-processing industry includes over 150 large enterprises in 16 sub-sectors: meat and dairy, fruit and vegetables, flour and cereals, bakery, pasta, edible oils, confectionery, fish processing, salt-extraction, distillery, wine-making, brewing, soft drinks, and food concentrates).

Consumer goods There are over 400 companies producing consumer goods in the oblast. Their product range includes furniture, refrigerators, gas stoves, kitchenware, textiles, ready-made garments and knitwear, footwear, etc.

The sectors manufacturing consumer goods are poorly invested, which hinders their production development.

A considerable part of goods is brought into the oblast from other parts of Ukraine (nearly two times as much as supplied by the Donetsk oblast to other oblasts).

Industrial products manufactured in the oblast are known in more than 120 countries of the world.

The foreign trade volume of the oblast amounts to USD 3.0 billion with the net balance of USD 1.4 billion. The share of exports is 73%. By its foreign trade volume the oblast is only inferior to the city of Kyiv and the Dnipropetrovsk oblast.

Scientific potential of the oblast is concentrated in 44 specialized research and engineering institutes and 34 survey and design institutes.

Education and training. 93 academic institutions of 1-4 accreditation levels provide higher education. About 40,000 specialists in various fields graduate from them every year. The oblast enterprises employ highly professional specialists, many companies have their own engineering departments and experimental laboratories.

In order to ensure favorable investment conditions in the oblast the Law of Ukraine "On special economic zones and a special investment regime in the Donetsk oblast" was passed on December 24, 1998. It provides for creation of 2 special economic zones in the region: "Donetsk" in Donetsk and "Azov" in Mariupol, as well as introduction of a special investment regime within the priority development territories including such cities and towns as Donetsk, Mariupol, Horlivka, Makiivka, Yenakievo, Ugledar, Dzerzhinsk, Dimitrov, Dobropolie, Zhdanovka, Kirovske, Krasnoarmiysk, Krasny Lyman, Novogrodivka, Selidove, Snizhne, Torez, Shakhtersk, and Amvrosiivka, Volnovakha, Konstantynivka, Slovyansk and Mar’ino districts.

These cities, towns and districts occupy 40% of the oblast’s territory; 84% of the oblast’s population reside here. These areas account for 85% of the oblast’sal industrial output and 93% of the external trade volume of the oblast.

For the priority development territories a list of priority economic activities is adopted. These activities including agriculture, food processing, power generation, gas extraction, construction, trade and some others will be developed on preferential terms within a special investment regime.

The special investment regime will not only enable establishment of new businesses, but also promote efficient reconstruction and modernization of the existing ones.

Since the coming of the law into effect, the investment activity in the oblast became more intense. The direct investment volume exceeded that of the past years.

The Council for special economic zones and a special investment regime in the Donetsk oblast approved the beneficial regime of implementaation of 80 investment projects with the total value of UAH 3.8 billion (which is equivalent to USD 646 million), including 44 projects amounting to UAH 1.9 billion with foreign investors participation.

Foreign investments are made by non-residents from 21 countries. The largest investment to the oblast’s economy are made by businesspeople from: Great Britain, the USA, Germany, Netherlands, Switzerland, Austria, Israel, Greece, Slovenia, Syria, Estonia, Jordan, and others.

The Law of Ukraine "On special economic zones and a special investment regime in the Donetsk oblast" enables the investor to solve all the issues related to capital investment into special economic zones and the priority development territories.