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Overview of Luhansk Oblast The Luhansk region is located in south east Ukraine in the watershed of the mid current of the Seversky Donets river on its route from the Donbass to Russia. The region was founded on June 3, 1938, and covers an area of 26,700 sq.km (4,4% of state territory). The population is 2.9 million (5.7% of the total Ukrainian population) - the fourth highest of all the Ukrainian regions. The average density is 105 people per 1 sq.km, with 87% of the population living in towns and 13% - in villages. Ethnically, the region includes 54.8% Ukrainians and 41.7% Russians. Administratively, it is divided into 18 districts, with 37 towns and 109 major settlements. Altogether, there are 980 dwelling locations in the region. The Luhansk region’s largest towns are Severodonetsk, Krasny Luch, Stakhanov, Alchevsk and Rubezhnoye. The regional center is the city of Luhansk, located 800 km from Kiev and 300 km from the nearest sea port, Mariupol, on the Sea of Azov. Luhansk is one of the largest cities in Ukraine with a population of about 600,000. In 1995, it celebrated its 200th anniversary. Luhansk is a major industrial center of Eastern Ukraine and an important transport link with railroads, highways and airways crossing the city from West to North, Central and Southern Russian provinces. The city of Luhansk has very close sister-city links and economic relations with Lublin (Poland), Cardiff (Great Britain), Pernik (Bulgaria) and others.

From South to North the Luhansk region stretches for more than 250 km and from West to East for 190 km. The region’s North, East and South boundaries coincide with the Ukrainian borders. There it borders the Belgorod, Voronezh and Rostov regions of Russia. In the South-West it borders the Donetsk region and in the North-West it borders the Kharkiv region of Ukraine.

The regional landscape is typically lowlands running upwards from the Seversky Donets valley to the north and Donetsky mountain ridge in the south.

The soil is fertile, mostly chernozem. Application of advanced climate-oriented agriculture technologies would lead to rich harvests of locally grown plants. The region has few forests, accounting for only 7% of the region’s area.

The region has billions of tons of coal reserves. Two-thirds are anthracites and one-third are power-station grades. Plentiful supplies of limestone, sandstone, chalk, marl and various types of clay widely used in construction are also available. Huge reserves of waste tips have accumulated alongside collieries which could also be used in construction. There are also gas deposits. Luhansk and Starobelsk have mineral springs, which are said to have medical properties.

The climate is temperately continental. The average temperature in July (the warmest month) is 21 C and in January (the coldest month) is -7C. Winter is moderately cold with sharp Eastern and South-Eastern winds and frosts. Summer is sultry, its second half is noticeably dry. Autumn is sunny, warm and dry.

Goods produced in the Luhansk region can quickly be delivered to Kiev, Moscow, Rostov, Belgorod, Voronezh and the Azov and Black Sea ports by road, air, and rail.

With relatively low investments Luhansk city airport could be quickly transformed into an international airport.

The Luhansk region is a major industrial center. In term of production output it is the fifth most productive region in Ukraine.

By far the most important group is composed of coal extraction, metallurgy, machine-building and metal-processing industries, but recently their share has been decreased as the chemical, petrochemical and glass production branches of industry have significantly increased their output. Wood-processing and construction materials production are also currently being developed.

Former state industrial enterprises are being transformed into joint-stock companies of various types, including holding companies and other corporate structures.

- Coal mining 28.6%

- Metallurgy 23.5%

- Chemistry and petrochemistry 12.6%

- Machine-building and metal-processing 9.3%

- Food sector 6.9%

- Energy 8.3%

The coal mining industry accounts for 36% of the industrial fixed assets of the region. Most of them need re-tooling.

Machine-building and metal-processing possess 14.3% of the industrial fixed assets and produce a wide range of goods.

Following these two major groups are chemistry and petrochemistry, producing fertilizers, synthetic ammonia, caprolactone, soda, dye stuffs and technical rubber. These industries possess 17.2% of regional fixed production assets. Metallurgy accounts for 11.5% of industrial fixed assets.

In the national labor division the Luhansk region provides 25% of coal extraction, metal-cutting lathes, electric engines, baking soda production and over 15% of oil products, steel pipes, fertilizers, synthetic ammonia, and textile production. It also produces coke, metal, cast iron, steel, rolled metal, electric locomotives, cargo wagons, mining machinery, electric equipment, accumulators, carbamide, carbolactame, dye stuffs, plastic, rubber, window glass, furniture, shoes, household appliances and many other goods.

Historically there are three major production centers:

- Luhansk - machine-building, metal-processing and textile enterprises;

- Alchevsk and Stakhanov - mining, metallurgical and machine-building enterprises; and

- Lisichansk, Rubezhnoye, Severodonetsk – chemical and petrochemical enterprises.

The leading enterprises are:

JSC "Alchevsky Metallurgichesky Zavod" is one of the largest producers of cast-iron, steel fraction, thick-sheet and high quality rolled metal both in and outside Ukraine. The plant exports its products to more than 30 countries. Its product is certified by "Lloyd Register" Co (Great Britain) and "TUF" (Berlin-Branderburg, Germany). In 1995 in Paris the plant was awarded an international prize "For Commercial Prestige" for the high quality of its products and corporate image. Its range of products is extensive and increasing in demand.

JSC "Lugansky Trubny Zavod" is one of the leading producers of steel water and gas electrically welded small diameter pipes. It has an annual production capacity of 300,000 tons. The plant produces galvanized pipes and jointly with foreign companies it is mastering the production of high precision pipes for car and tractor shock absorbers. Goods produced by the plant are widely used in Ukraine, Russia, Belarus, Kazakhstan, Turkmenistan, Moldova, Lithuania, Latvia, Estonia, Germany, and Italy.

Severodonetsk State Production Association "Azot" is one of the largest producers of nitrogen fertilizers. It normally exports about 200,000 tons of nitrogen fertilizers to the CIS and other countries. The association produces more than 60 items, including ammonia, carbamide, methanol, acetic acid, formalin, catalyst, acetone, polyvinyl-acetate glue and emulsion.

JSC "LisichanskNefteOrgSintez" (Lisichansk Petro Organic Synthesis) annually processes 24 million tons of Tumen oil for Russian suppliers. In 1992 polypropylene and catalytic cracking were put into production.

JSC "Steklopastik" manufactures glass fiber wall and roof insulating materials and protective film for heating mains.

JSC "Stakhanov Technical Carbon Plant" exports technical carbon of various types to all the CIS countries, Poland, the Czech Republic, and Slovakia.

JSC "Lisichansky Zavod RTI" (Lisichansk Technical Rubber Plant) produces various items, including moulded and unmoulded goods, sleeves, conveyor tapes and wedge belts.

Agricultural gross output accounts for 2.9% of total GDP. The main emphasis is placed on grain and industrial crops, meat and dairy livestock production.

The agriculture sector includes 334 enterprises of various types of property: 1,469 farms, 8 closed joint-stock companies, 175 limited liability companies, 5 open joint-stock companies, and 75 private leasing companies. All these enterprises have 1.88 million hectares of land, of which 1.58 million hectares is cultivated; 1.18 million hectares have ploughed fields.

The region has 155,3 hectares of ploughed fields which are state land reserve intended to be formed into private farms. Some 67.7 hectares of unclaimed state reserve is temporarily used by collective and state agriculture companies and local governments - this is the reserve for forming new farms.

The total sales of all the regional agriculture companies in 1999 was UAH 732.4 mln, 50.8% of which came from plant growing and 49.2% from livestock farming. The share of the private sector (farms included) was 62%.

CONSTRUCTION

The Luhansk region has developed over 400 construction enterprises with a total labor force of nearly 77,000.

Around 300 are construction and assembling enterprises and transport companies, and more than 100 are manufacturers of wall materials, pre-fabricated ferro-concrete structure, metal constructions, glass, lavatory and bathroom equipment, insulating materials, power and binding (lime) materials. These companies employ about 13,000 people.

The construction industry infrastructure includes 11 project and research institutes, 17 production and scientific associations, 27 procurement agencies, 2 railway companies and 7 transport companies.

The construction industry possesses rich reserves and a developed infrastructure suitable for manufacturing a wide range of construction materials and consumer goods. A number of construction companies are potential exporters.

Around 65 enterprises produce wall materials, 45 of whom also manufacture small units. The annual production capacity of wall materials is 644 million bricks, including 543 million pieces of unit brick of small-sized construction materials.

About 30 companies produce slag concrete blocks, aerated concrete blocks and stone blocks. Major companies are JSC "Silicat", "StroiIndustriya" Ltd, and "Georgievsky ZSM" Ltd.

Some 15 enterprises produce lime sand and ceramic brick. "Rubezhansky ZSM" Ltd is the leading producer of lime sand brick, it produces 57% of the region’s lime sand output. The major producers of ceramic brick are: "Pervomaisky ZSM’ JSC, Severodonetsk Ceramic Brick Plant, "Azot" Production Association, "Zimogorievsky KZ" JSC.

Seven enterprises produce bricks using mining waste as the raw materials. They widely apply semi-dry and "hyper" pressing method to process sandstone, slag, coal wastes and shell rock.

Ecological safety is ensured by "EcostroiAvto" Ltd, creating effective technologies and producing specialised machinery for sulphur refinement and advanced milling machinery. Their technologies are cost-saving and environment-protective.

The ore-free construction materials sub-sector includes 7 enterprises specialising in sand extraction and production of road-metal with solidity 700-1000 kg per sq. cm (the annual output is 3.0 and 6.0 mln cub m. respectively).

In total there are 6 road-metal plants and cast pits. Major enterprises are: "Kondrashevsky Peschany Carier" (Kondrashevsky Sand Pit), JSC "Krasnoluchsky ZSM-6", JSC Uspensky Carier" (Uspenka Sand Pit), Medvezhansky and Komsomolsky Sand Pits, Valyanovsky Road Metal Plant.

Open mining method is used to extract ore-free materials. Drilling and blowing is carried out by Luhansk Department of Blow-up Workings, which is properly equipped for these types of operations.

Some 23 companies produce reinforced concrete structures and their total annual output is 840,000 cub.m. "LuganskStroi", "Lisichansky ZhBI" (Lisichansk Reinforced Concrete Plant), JSC "Severodonetsk Zhelezobeton" (Severodonetsk Reinforced Concrete Plant), "LuganskShahtoStroiIndustriya" (Lugansk Mine Construction Company), JSC "Krasnoluchsky ZhBI-7", "Stakhanovsky ZhBI-7", JSC "ZhBI" are known to be the most significant and reliable partners.

The region accommodates large production facilities for frame-and-panel plates (700 000 sq.m of housing annually).

Nine companies specialize in production of wall facing materials and ceramic tiles, with JSC "Keramik"(Ceramics) being the largest of them.

Two companies produce heat and sound-insulating materials. JSC "Alchevsky ZSK" produces mineral wadding, it also works on producing hard mineral plates made out of non-toxic binding materials and insulating shells for pipes.

Metal structures, non-standardized equipment and metal attachment units for construction industry are produced by 10 construction enterprises and 18 companies of mining, machine-building and other sectors.

Wood-processing, saw-timber, window and doorframes production is carried out at 12 enterprises.

Glass industry is represented by 3 enterprises: JSC "Lisichansky Stekolny Zavod" (Lisichansk Glass Works), Lisichansk Glass Works "Proletary", and Popasnoye Glass Works, which together produce about 50% of total Ukrainian window glass. All these enterprises enjoy a reputation of being reliable partners in the international market. They also have a number of investment portfolios prepared for future partnerships.

"Lisichansky Stekolny Zavod" offers thin glass and also has facilities for reinforced rolled and pattern glass, glass fibre, smalt, silicate blocks, fireproof and other consumer goods production.

"Proletary" Glass Works manufactures high-quality polished glass by the float process method on melted metal, polished window glass, glass accessories for vehicles, various devices and furniture, mirrors, flat triplex, stalinite and stematite, fire-proof items, silicate blocks.

The collective enterprise "Popasnyansky Stekolny Zavod" specialises in high-quality tableware, tableware sets and glass disperses for production and consumer lamps.

The construction industry in the Luhansk region possesses huge production facilities; a number of perspective sites are nearly finished. With its rich resources and a developed infrastructure, it has all the necessary prerequisites for attracting potential investors. More than 95% of the enterprises are privatised, others are being shareheld and under privatisation.

The Luhansk region sustains trading and economic relations with 78 countries.

Foreign trade turnover totalled USD 737.6 mln with favourable balance of USD 280.5 mln. In term of export it is the sixth largest exporting region in Ukraine.

The leading exporters are: Alchevsk Metallurgical Plant, JSC "Linos", Severodonetsk "Azot:, Stakhanov Ferro-Alloys Plant, JV Intersplav", Luhansk Sewing Factory "Style", JSC "Luhansk Pipe-Producing Plant", JSC "Krasitel".

The Luhansk region exports to 75 countries. In 1999 the total exported goods value was USD 509.1 mln, which accounts for 69.0% of the total foreign trade turnover of the region. The leading trading partners are: Germany – USD 35.6 mln or 7.0% of the total export; Italy – USD 44.5 mln or 8.7%, Belarus – USD 9.3 mln or 1.8%, Turkey – USD 56.2 mln or 11.0%, Moldova – USD 5.0 mln or 1.0%.

The main exports are: steel, rolled iron, petroleum, fertilizers, metal cutters, ferrous metal and ferrous metal goods, plastics, accumulators, paints, coal-preparation machinery, foodstuffs, organic chemicals.

Last year the region imported goods from 59 countries for USD 228.6 mln, which accounts for 30.9% of the total regional turnover. The main imports partners were: Germany – USD 25.8 mln or 11.3% or the total import, France – USD 7.0 mln or 3.1%, Belarus – USD 5.1 mln or 2.2%, India – USD 3.4 mln or 1.5%. Imports included: oil, gas, wood, semi-finished and consumer goods.

A key feature of the Luhansk region is its close economic co-operation with Russia, which could be explained by its geographical position. The Russian Federation remains the leading trading partner for both exports (20.7% of the total exports) and imports (57.9%).

TRANSPORT AND COMMUNICATIONS

The region has an advanced transport infrastructure, which serves the needs of the coal-mining, metallurgy, chemical, petrochemical and other industries, particularly in terms of barter trade with the bordering Russian regions. Around 8% of the population is employed in transport related jobs.

The railway transport sector is represented by the Luhansk branch and partly the Debaltsevo branch of Donetsk Railway Co, and the Popasnoye State Enterprise for Freight and Passenger Transportation. Railways length is 2009 km, spur tracks - 23,20 km. Railways density is 75.2 km per 1000 sq. km.

The region has an extensive highway network, some 8,000 km within the towns and villages. The "Sovtransavto-Luhansk", Ukraine’s largest transport company, is located in Luhansk.

Municipal transport is also rapidly developing, including trolley buses, buses and tramways.

The regional air transport is provided by Luhansk State Aviation Co and by "Severodonetsk"Airport.

The piping system is maintained by Lisichansk District Pipelines Dept. (67 km) and by Dept. of Trunk Pipelines (99.6 km).

The regional telephone communications network covers all populated areas (419 telephone exchanges). Automatic domestic and international communication is possible to all cities and district centers. Through the new digital telephone exchanges introduced by UTEL, Luhansk has direct and stable telecommunications links with many countries around the world.

Mobile and paging communication is widely spreading. Luhansk also has its own Internet providers.

The region accommodates 50 research centers that represent the Academy of Sciences of Ukraine, Ministries of Coal-Mining and Machine-Building and other institutions. The number of researchers is 3,652. In 1998, research was conducted for UAH 31,112.8.

The leading institutions are: Luhansk branch of the Institute of Industrial Economy of the National Academy of Sciences, "UkrNIIObogascheniye"(Ukrainian Research Institute of Coal Preparation), "UkrNIIGidroUgol"(Ukrainian Research Institute of Coal Hydration), Scientific and Production Association "UgleMekhanizatsiya"(Coal Mechanization), State Mines Project Institute "LuganskGiproShaht", State Research Center of Chemical Technologies "KhimTekhnologiya", State Research Institute of Chemical Machine-Building, State Project and Design Bureau of Coal-Preparation Machinery "GiproMashUgleObogaschenye", JSC "Impulse" computer center.