Steel enterprises of Metinvest operate at 65-75% capacity

As of November 2023, Metinvest Group’s steel enterprises are operating at 65-75% of their capacity. This was stated by the company’s Chief Financial Officer Yulia Dankova in an interview with dsnews.ua.

The company’s mining and processing plants are currently operating at 35-40% of their capacity. In total, in the first half of 2023, the company produced more than 1 million tons of steel, 4.75 million tons of iron ore concentrate and more than 3 million tons of coal concentrate.

«As a result of the war, Metinvest lost control over two large plants in Mariupol and suspended production in Avdiivka. These and other challenges we continue to overcome have forced us to restructure our business to survive. First of all, we provided the opportunity for our foreign enterprises to act separately, since the vertically integrated structure was broken,» she comments.

Before the war, the Mariupol factories supplied semi-finished products to the rolling mills of the company abroad, and coal concentrate went to Ukraine from the USA. Currently, the assets of Metinvest in Italy, Great Britain and the USA operate as independent enterprises. Coal mines in the US have reoriented sales of products to domestic and export markets, and rolling mills are buying semi-finished products on the open market.

Since the Black Sea ports, through which raw materials and steel products were traditionally exported to Asia and Europe, are blocked by the Russians, the company had to build new logistics chains.

«Now we supply raw materials to European countries by rail, and we ship products by sea from eight European ports in Poland, Croatia, and Romania. The company has completely reoriented all metal exports to the European market,» said Yulia Dankova.

At the same time, compared to steel products, the situation with the export of iron ore is much worse. Due to the impossibility of transporting raw materials by sea, the company is forced to significantly reduce the loading of the Kryvyi Rih Minings.

«Currently, raw materials are exported through the western border crossings to consumers in Europe and further to European ports, but total exports are much lower than in the prewar period. The distance to EU ports is three times longer than the distance to Ukraine’s Black Sea ports. This means a 4-6-fold increase in logistics costs compared to pre-war levels,» added the financial director of the company.

After the first ships with grain and metal left Ukrainian ports, there was cautious optimism that Ukraine would be able to resume full-fledged exports. The recovery of maritime exports is particularly important for the mining industry. Before the full-scale invasion of the Russian Federation into Ukraine, the main volume of exports of iron ore raw materials went by sea to China through ports, and only 10% went to Europe.

«Currently, raw materials are exported through the western border crossings to consumers in Europe and further to European ports, but total exports are much lower than in the prewar period. The distance to EU ports is three times longer than the distance to Ukraine’s Black Sea ports. This means a 4-6-fold increase in logistics costs compared to pre-war levels,» sums up Yulia Dankova.

As GMK Center reported earlier, Metinvest in the first half of 2023 reduced steel production by 57% compared to the same period in 2022 – to 1.032 million tons. Pig iron production for January-June 2023 amounted to 918 thousand tons, which is 59% y/y, the output of iron ore fell by 46% y/y year, to 4.75 million tons, and coke – by 40% year-on-year, to 648 thousand tons.