Metinvest plans to increase the capacity of mining plants to at least 30%

Metinvest Group plans to gradually increase the capacity of mining and processing plants to at least 30% of the pre-war level and focus mainly on the production of iron ore pellets. The company’s press service informed GMK Center about it.

The company has already resumed the operation of the Northern and Ingulets mining and processing plants (GOKs), which had been idle since July 2022. It is noted that the plants were commissioned at the end of last year. Thus, all four GOKs, in particular the Central and Southern, are working and producing products.

“At the beginning of 2023, the Ukrainian government allowed electricity imports from the EU to be exempted from rationing restrictions to alleviate local energy shortages. Metinvest decided to use this opportunity to organize the purchase of imported electricity for its own needs, which allows to increase the quotas for electricity supply. This had a positive impact on the Group’s work,” the press release states.

The corresponding solution also ensured more stable work at the Kametstal and Zaporizhstal Iron and Steel Works, which operate with two blast furnaces each. Metinvest Pokrovskvugillia is currently operating at 80% of its pre-war capacity.

“The full extent of the impact of the events in Ukraine on the assets of Metinvest generally remains unknown. This will largely depend on the duration and scale of the war, as well as the direct impact of the war on the Group’s production assets,” the company adds.

The volume of production at Metinvest’s GOK has significantly decreased due to the war in Ukraine. The shutdown of the Mariupol steel plants from the end of February 2022 has significantly reduced intragroup consumption of iron ore and local demand. In addition, production volumes were negatively affected by export logistics restrictions amid the blockade of the Black Sea ports.

To minimize stocks of iron ore products, the Group announced temporary stoppage of production at the Southern, Ingulets and Northern mining and processing plants. The first two were stopped from July 1, 2022, and the Northern GOK – in mid-July. Only the Central GOK remained in operation, but with reduced capacity.

In November 2022, Metinvest reported on resumption of Southern GOK’s work after a 4-month standstill.

As GMK Center reported earlier, in January 2023, Ukrainian mining companies increased the export of iron ore by 21.2% compared to December 2022 – up to 927.4 thousand tons. The improvement of Ukrainian export indicators was probably influenced by the gradual recovery of the work of European steel companies, which suspended production in the second half of last year due to unfavorable market conditions and the increase in the cost of energy resources.

In particular, at the beginning of 2023, Slovak US Steel Kosice resumed work of all three blast furnaces that have not worked since September and November 2022. The restart of production is also reported by Liberty Steel, which has plants in Romania, Belgium, Poland, ArcelorMittal, which has suspended about 7 million tons of annual capacity in Europe since the end of summer 2022, and other European companies.

In January 2023, Ukrainian steel companies exported 28.6% of iron ore to Slovakia, 28.5% – to the Czech Republic and 20.1% – to Austria.