Ukrainian ferroalloy industry fails to resume operations

Active hostilities and proximity to the front line create maximum uncertainty for the industry

Ukrainian ferroalloy companies do not yet have clear plans to resume production in the near term. The plants have been idle since the fall of 2023 due to the high cost of electricity and proximity to the front line. In addition, according to Sergiy Kudryavtsev, director of the Ukrainian Ferroalloy Association UkrFA, the industry has problems with staff booking due to an imperfect mechanism for booking against mobilization.

According to a press release from Pokrovsk Mining and Processing Plant (Pokrovsk GOK), which specializes in the extraction and processing of manganese ore and the production of manganese concentrate, the company does not plan to launch production in April 2024, but there are some optimistic forecasts.

«One of the main reasons for the plant’s shutdown last fall was the high cost of electricity. Now there is hope that the Ministry of Economy and Ukrenergo will develop a program to supply the steel industry under a long-term contract, i.e. at a fixed price. But this is still a hope,» said Viktor Bondarets, technical director of Pokrovsk GOK.

Since the beginning of 2024, the plant has focused on procuring and shipping ferrous and non-ferrous scrap metal, scrap conveyor belts, and repairing its locomotive fleet. In April, the company will continue procuring and shipping scrap metal and gradually prepare equipment for the upcoming launch.

Pavlo Kravchenko, chairman of the board of Zaporizhzhia Ferroalloy Plant, told Interfax-Ukraine that the company is currently not operating and that no decision has been made to start working.

«There is no final decision. We are still agreeing on options for how much electricity can be supplied to us. The decision has not been made yet. I can’t say any more at the moment,» he added.

The prolonged downtime of the industry’s enterprises has already affected export activities. In particular, in January-February 2024, Ukraine’s exports of ferroalloys fell by 99.4% y/y – to 0.5 thousand tons compared to 96.8 thousand tons a year earlier. Export revenue fell to $1.81 million compared to $85.23 million a year ago (-97.9% y/y).

Thus, due to uncompetitive electricity prices and other significant factors hindering the restart of production, the Ukrainian budget is not receiving a significant amount of export revenues from the ferroalloy industry.

As GMK Center reported earlier, Ukrainian ferroalloy companies reduced production by 57.4% in 2023 compared to 2022. In 2024, according to Sergiy Kudryavtsev, Executive Director of the Ukrainian Ferroalloy Association UkrFA, the state of Ukraine’s ferroalloy industry will depend on three factors: shelling, logistics and affordable electricity.