When will Ukraine finally launch its own window glass production?

According to experts’ estimate, $65 to $100 bln will be needed to purchase construction materials for the post-war reconstruction of Ukraine. Therefore, it is very important for us to have our own production of at least the basic ones, like cement, concrete and metal structures, bricks, roofing elements, and window glass. According to various estimates, even with the construction industry capacities lost due to Russian aggression, Ukraine will be able to meet 80 to 90% of its needs with its own construction materials in the first post-war years. However, there may be problems with metal structures (due to the destruction of key production facilities in the eastern part of the country), roofing materials (heavy dependence on Chinese imports), or, for example, cement, which is produced in half the amount of expected ‘reconstruction’ needs. But the situation with sheet (window) glass is the worst: Ukraine does not produce it at all, and each enemy shelling means new losses.

THE STATUS QUO SO FAR: OUR HOMES WITH ‘FOREIGN’ WINDOWS

For almost ten years now, Ukraine has been importing all float glass for modern insulating glass units. Before the Big War, 75% of all supplies came from the aggressor states of Russia and Belarus. According to the State Customs Service, Ukraine imported almost 340,000 tonnes of float glass in 2021, worth more than UAH 4 bln (over $150 mln at the then exchange rate). Approximately 150,000 tonnes were imported from Russia, and up to 100,000 from Belarus. Thus, just by selling this glass to Ukraine, Russia earned about $70 mln in the last year before the war!

In 2022, supplies from the Russian Federation stopped. However, some sources claim that Ukraine still receives 20 to 25% of its window glass from neighbouring Belarus, in particular through intermediaries, with the glass being registered as supplies from European or Turkish manufacturers.

However, the only float glass production facility in our country in Lysychansk stopped working back in 2015. According to analysts, it was deliberately bankrupted. The plant shut down due to large gas debts.

It is worth noting that back in the late 2010s, it was planned to set up a large modern glass production facility in Borodianka, Kyiv Oblast, with an investment of $300 mln. However, it was not meant to be.

So we are left with a disappointing status quo: Ukraine produces only small amounts of glass domestically, using 19th-century technologies (drawing, casting, and grinding). Of course, such products cannot be used in modern construction according to EU technical standards, which the country has committed to adopt.

At the same time, Ukraine’s reorientation to importing sheet glass from Europe has increased demand for it in the European market, where manufacturer’s prices are rising. Coupled with rising transportation costs, this has already led to a 10 to 15% rise in the price of glass in Ukraine. And this is not the end.  The pressure on the European market will only increase if the reconstruction picks up and Ukraine continues to lack its own float glass production. So we will have to pay even more for imported resources.

Experts estimate that the country’s annual demand for 27 mln m² of window glass is worth $165 mln (at current prices). According to analysts, even now, in the midst of the war, we have everything we need to set up our own production. The only thing missing is money, since the industry needs hundreds of millions or even billions of dollars of investment to revive.

However, the only float glass production facility in our country in Lysychansk stopped working back in 2015. According to analysts, it was deliberately bankrupted. The plant shut down due to large gas debts.

It is worth noting that back in the late 2010s, it was planned to set up a large modern glass production facility in Borodianka, Kyiv Oblast, with an investment of $300 mln. However, it was not meant to be.

So we are left with a disappointing status quo: Ukraine produces only small amounts of glass domestically, using 19th-century technologies (drawing, casting, and grinding). Of course, such products cannot be used in modern construction according to EU technical standards, which the country has committed to adopt.

At the same time, Ukraine’s reorientation to importing sheet glass from Europe has increased demand for it in the European market, where manufacturer’s prices are rising. Coupled with rising transportation costs, this has already led to a 10 to 15% rise in the price of glass in Ukraine. And this is not the end.  The pressure on the European market will only increase if the reconstruction picks up and Ukraine continues to lack its own float glass production. So we will have to pay even more for imported resources.

Experts estimate that the country’s annual demand for 27 mln m² of window glass is worth $165 mln (at current prices). According to analysts, even now, in the midst of the war, we have everything we need to set up our own production. The only thing missing is money, since the industry needs hundreds of millions or even billions of dollars of investment to revive.

Photo: wikipedia

UKRAINIAN WINDOW GLASS: ASSESSING RAW MATERIAL AND FINANCIAL OPPORTUNITIES

Domestic raw material opportunities for float glass production in Ukraine are quite good. We have large reserves of silica sand and quartz. Moreover, our country ranks second in Eastern Europe in terms of proven reserves of glass raw materials, with up to a hundred such deposits. According to experts, their resources will last for more than a century. Before the Big War, however, only 2% of the sand extracted annually was used for domestic needs, i.e. for the aforementioned outdated sheet glass production and the manufacture of glass containers, tableware, Christmas tree decorations, and so on. The rest was exported... Mostly to Russia and Belarus. The same statistics for 2021 shows that 67% of all Ukrainian sand exports went to Russia, and another 23% to Belarus. We gave them cheap raw materials, and they gave us high value-added products.

Ukrainian business is ready to create added value within the country. Several companies have already announced their intention to invest in window glass production. We even have projects ready for implementation. The only problem is the lack of finance. This affair is very costly. During this year’s Kyiv Investment Day Forum, Ihor Liski, Chairman of the Supervisory Board of EFI Group, outlined the problem: ‘We have embarked on a very important glass manufacturing project. It turns out that we need €220 to 250 mln to launch our production. And even if it is built correctly, in partnership with European companies, technology and equipment suppliers, we realise that a very important obstacle is the lack of project financing in Ukraine. Our group of investors is ready to invest €70 to 80 mln of their own funds in the production. Finding the rest is a problem, as banks are reluctant to provide loans for such expensive and complex projects’.

Another obstacle that is likely to deter potential investors is the uncertainty of gas supply, since the share of natural gas in the glass cost exceeds 50%.

At the same time, some experts are quite optimistic: there are good chances that strategic investors will come to this unoccupied niche, including large specialised American and Japanese corporations that have withdrawn from the Russian market due to Putin’s aggression against Ukraine. Obviously, they won’t come to us before the war is over. So it will take several more years to launch full production. During this period, Ukraine will either have to increase imports of finished glass from Europe, Turkey, and Azerbaijan or financially support the initiatives of domestic businesses.

‘We will need at least $65 bln worth of construction products to rebuild Ukraine. This is an additional 100,000 jobs, more than $1.5 bln of taxes. And this is the added value of $16 bln that will remain here in Ukraine and be spent on the development of our economy. I would very much like all these construction materials that will be used in the reconstruction process to be produced in our country’, summed up Olena Shuliak, Chair of the Verkhovna Rada Committee on State Building, Local Governance, Regional and Urban Development, in the Ukrinform programme ‘Samokhvalov Asks’.

Vladyslav Obukh, Kyiv

First photo: depositphotos