Despite the war, the company did not change its strategy for modernization

Metinvest is conducting negotiations with the Ministry of Economy and the Office of the President regarding the normalization of legislation and regulatory acts to reduce the fiscal burden in wartime on operating enterprises and increase capacity utilization. Yuriy Ryzhenkov, the company’s CEO, reported about it in the interview within the framework of the Forbes Ukraine special project «Country of Heroes», writes Interfax.

According to him, the beginning of the year was normal for the company – in January-February 2022, the market situation for steelmakers was quite attractive. But currently there are serious difficulties – first of all, with the loss of enterprises, people, the loss of already built logistics chains,

Yuriy Ryzhenkov said that the Zaporizhstal Iron and Steel Works is currently operating at 45-50% capacity. In July, Kametstal operated at 30% capacity, but it can increase the load to 60-70% if the market conditions are positive and the state can find appropriate regulatory solutions.

“So, for example, now there is law 5600 – on increasing the rent. Now the rent is taken from the Chinese price, when we cannot even bring our iron ore to the port. And we can not only send it to China, but even deliver it to all European consumers. Therefore, this decision is incomprehensible for the wartime period. And that’s why we are now in dialogue with the Ministry of Economy and the President’s Office – we need to postpone it at least for the period of war, wartime,” says the company’s CEO.

Yuriy Ryzhenkov added that other decisions must be made. According to him, Metinvest has seriously reviewed all the components of its products and is studying how to enter its key markets at cost price.

The Group’s mining enterprises are currently 30% loaded on average. Ingulets GOK and PGOK only ship iron ore from warehouses, not mining. Central GOK and Pivndennyi GZK work on the production of pellets almost 100%.

The company’s European assets suspended production in May due to the lack of slabs previously supplied by Azovstal, and it takes time to develop supply chains. Currently, they are all operating at 75-100% capacity. The Metinvest’s mine in the USA, while remaining part of the Group, works as an autonomous unit on the market.

The CEO of Metinvest says that despite the war, the company did not change its strategy for modernization, although there are certain losses that will never be filled.

“But from the point of view of the global strategy of iron and steel industry – it does not change, we need to go to the production of higher-quality goods with greater added value,” noted the CEO of the company.

So, in particular, the strategy of technological re-equipment for GOK has not changed, although the scale has been reduced, and some processes have been deployed less intensively.

The company has several strategic scenarios that provide for the restoration of synergy with Ukraine of European companies, scenarios for the construction of new enterprises that will be able to strengthen the potential of Ukrainian companies.

“Recently, we discussed the possibility of building a plant in Bulgaria, Italy. It is not just to invest in Bulgaria or Italy, it is in order to provide our GOK with a normal sales market for the high-quality products that we will produce here. Therefore, these are all related things,” Ryzhenkov says.

According to him, there are plans for Zaporizhstal, Kametstal, mining and processing plants, it depends on the unblocking of logistics routes. In addition, there are bottlenecks with logistics chains that can be expanded – the company works with Ukrzaliznytsia, Polish and Romanian railways.

As GMK Center reported earlier, Metinvest Group is operating at the level of 30-50% of the company’s pre-war capacities due to logistical problems. Yuriy Ryzhenkov informs about it in the Money Talks podcast of The Economist’s British edition. “Even such indicators are difficult to achieve due to logistics, since Black Sea ports are not available for Ukraine to export iron ore, steel and coal.