Companies implement projects that are critical for production

The full-scale invasion of Russia led to a sharp drop in investment in all sectors of the Ukrainian economy. The Ukrainian iron and steel sector was no exception.

According to the State Statistics Service, in 2022, capital investments by iron and steel companies decreased in dollar terms:

  • by 73%, up to $245 million – in steel industry,
  • by 69%, up to $308 million – in iron ore mining.

In the current environment, companies are forced to postpone new capital-intensive projects and focus on implementing projects that are critical to continuing production (major repairs, etc.), are of strategic importance, or are already at a high stage of readiness. This trend emerged with the outbreak of the Great War and continues to this day.

The war has significantly worsened the production and export capabilities of enterprises. Ukrainian companies have to compete in foreign markets with producers that do not have war-related restrictions. The key to the competitiveness of Ukrainian enterprises in the current environment is investment to maintain existing production facilities.

The Ukrainian steel industry is one of the sectors most affected by the Russian invasion. Currently, the number of steel mills has halved to six from twelve in 2013. Much of the capacity has been destroyed or is located in the occupied territories. As a result, the country’s nominal steel production capacity fell from 42 million tons in 2013 to 17.8 million tons in 2023.

According to GMK Center’s annual study, Contribution of the steel Industry to Ukraine’s Economy 2023, in 2021, before the start of the Great War, the steel sector accounted for every third dollar of total capital investment in the domestic economy.

Last year, capital investments by the largest companies in the industry fell by 17% compared to 2022 and 73% by 2021, to $600 million. However, analysts note that this is in line with the dynamics of production of the main types of products. That is, capital investment per ton of steel is close to the level of 2021.

The progressive escalation of hostilities in Ukraine is hindering the resumption of investment activity. Most companies have frozen large investment projects. However, they will resume as soon as the war is over, and the steel industry has a chance to become a driver of industrial investment.

Before the war, there was a discussion about decarbonizing Ukraine’s steel sector. The development of these projects is currently on hold, but we can expect them to resume after the war is over. Ukraine is planning to join the EU, and the European steel industry is already on the path to reducing carbon emissions. Accordingly, Ukrainian producers need to join the European trend to remain competitive.


Metinvest’s capital investments in 2022 amounted to $354 million (-72% y/y), with the mining segment accounting for 69% of the total. The steel business invested $99 million (-86% y/y).

With the onset of the full-scale Russian invasion, the Group changed its approach to the issue, focusing on immediate operational needs. The main initiatives in the new environment were related to the safety of production processes, in particular, maintenance to maintain the current level of production.

Due to the war, the company suspended almost all of its current strategic projects, except for the construction of a new mine block No. 11 at Metinvest Pokrovskugol to maintain production volumes ($109 million was spent in 2022).

In 2023, Metinvest’s capital investments amounted to $284 million (-19.8% y/y). The mining segment accounted for 75% of the total. The company invested $65 million in the metallurgical sector, including $42 million in the development of Kametstal. Metinvest Pokrovskugol was the largest recipient last year ($126 million).

The construction of the new unit No. 11 is considered the largest investment project in the coal industry since Ukraine’s independence. It was scheduled to be commissioned by the end of 2024, but the timeline was pushed back due to the war. Last year, the company installed 400 tons of steel structures, sank 378 meters of capital mine workings, and performed 824 cubic meters of grouting.

In February 2024, Metinvest Pokrovskvugillia reported that it was gradually bringing the project closer to completion. At that time, a ventilation shaft complex was built at the industrial site, and the next step was to prepare the air supply shaft facilities.

In 2023, Metinvest’s Kryvyi Rih mining and processing plants – Central, Ingulets and Northern Minings – spent a total of UAH 2.3 billion to maintain production capacity. The investment projects were aimed at ensuring the stability of production processes and overhauling machinery and equipment. For example, Northern Mining installed roller screens for raw pellets on the LURGI-552A roasting machine to maintain its competitive position in the European iron ore market. Central Mining completed an important energy efficiency project, and the bulk of Ingulets Mining investments were in the reconstruction of its tailings dump.

Zaporizhstal, the Group’s joint venture, has spent over UAH 1.2 billion to maintain its production facilities during the full-scale war.

In 2023, investments in projects to maintain the stability and reliability of the company’s main technological facilities amounted to UAH 750 million, which is half as much as in 2022 (UAH 500 million).

The key projects were implemented in the sinter and blast furnace shop, including the repair of sinter machines at the sinter plant, as well as technological maintenance and full support of gas cleaning systems. In the blast furnace shop, BF No. 3 was overhauled (approximately UAH 200 million), as well as air heaters No. 9 and 12. The company’s specialists also carried out a comprehensive overhaul of the hot rolling shop equipment, and the company implemented a number of other projects.

In 2024, Zaporizhstal plans to implement a capital investment program totaling about UAH 1 billion. In May, the company completed the third overhaul of blast furnace No. 2 (UAH 85 million).

Despite the war, the company continues to invest in the repair of equipment at Zaporizhkoks, one of the largest producers of coke for steel industry in Ukraine. Since 2022, the company has allocated over UAH 276 million for the overhaul of coke oven batteries No. 2 and No. 5-6. In 2024, the company will continue to implement the overhaul program, including coke oven battery No. 2, with an investment of UAH 60 million.

Metinvest, including joint ventures, was ranked second in the Ukrainian Forbes rating of the country’s 20+5 largest investors in 2022-2023. As explained to the publication, the group’s investment strategy is currently focused on maintaining the operability of its assets, with a total of $659 million allocated for this purpose during the war. However, the company is still working on the preparatory stages of key strategic projects. The planned amount of capital investments for the current year is about $319 million.

In the medium term, Metinvest plans to expand its presence in the Italian market by building a plant in Tuscany to produce 3 million tons of green steel per year. Construction is expected to take 2-3 years and the plant is expected to start production in 2027. Iron ore products from Ukraine will be used as raw materials. This scheme will increase the workload of Ukrainian mining and processing plants and provide an additional source of slabs for the EU market.


In 2022, the company’s capital investments amounted to $21 million (-66.6% y/y), and for 9 months of 2023 – $17.57 million, which is 16.9% higher than in the same period of the previous year.

Initially, the company’s investment program for 2022 consisted of nine major projects. Most of them concerned the development and expansion of production facilities, in particular, at Interpipe Niko Tube and Interpipe NTZ in Nikopol and Dnipro. It also included projects aimed at introducing new products and maintaining existing sales volumes.

However, due to the full-scale invasion of Russia, the company redirected its efforts to repair its facilities damaged by shelling, provide financial assistance to the Ukrainian military and civilians affected by the fighting. In addition, Interpipe was working to restore operations in the face of an electricity shortage. The strategic program was postponed for a year and a half.

In July 2023, the company’s board of directors decided to continue investing in production.

The decision to resume engineering for the project to modernize the heat treatment unit at Interpipe NTZ’s wheel-rolling shop to produce high-margin products in line with market requirements was approved even earlier, in March, as it is of strategic importance to the company. This project was developed in 2023.

As noted in the company’s 2022 report, before the suspension, the projects to build a pipe heat treatment line at PEWSh No. 2 and purchase an automatic hydraulic testing line from Interpipe Niko Tube were ahead of schedule. By the time the full-scale war began, they were more than 80% complete, so we were able to resume sales quickly without significant additional investments.

At the end of 2023, the company reported that it has a fairly aggressive investment program for the current year. The group aims to complete a large project to build a new thermal power plant in Nikopol, which costs more than a billion hryvnias. In addition, new investment projects are being prepared.


Due to the full-scale invasion of Russia in 2022, Ferrexpo has suspended its main expansion project, the Wave 1 program, due to the Russian Federation’s full-scale invasion. The total investment in the program is more than $600 million, and the expected result is an increase in the group’s production capacity by about 25%. However, the company said that it intends to resume project activities as soon as the risks in Ukraine decrease.

Ferrexpo’s total investments in 2022 amounted to $161 million, down 55% year-on-year. However, this is a high comparison base – the amount of investments in 2021 was the largest in the last 8 years ($361 million).

$104 million of this amount was spent on growth projects. Most of the costs were incurred on projects that were either nearing completion as of February 2022 or on projects with low costs and high profitability. The main project for the year was the construction of the first stage of a new press filtration complex to further reduce the moisture content of iron ore concentrate at the outlet of the concentrator before pelletizing. The installed equipment represents Metso’s press filtration technology, which will complement the company’s existing vacuum filter system.

Last year, Ferrexpo’s capital investments amounted to $101 million, which is 37% less than in 2022. In 2023, the figure amounted to 77% of EBITDA. In addition, the company once again prioritized development projects, allocating 70% of its capital investments to them.

The key areas of capital investments were as follows:

  • $22 million – capital excavation works;
  • $22 million – projects at the beneficiation factory and coagulation lines;
  • $13 million – improvement of the press filtration complex, which makes it possible to improve the qualitative characteristics of pellets and increase production volumes after the end of the war;
  • $3 million – development and exploration of the Bilanivskoye deposit;

At the beginning of this year, the company completed the commissioning of a concentrate filtration, storage and shipment complex at Poltava Mining’s crushing and processing plant. This completes a project that started in 2017. Its total cost was about $40 million.

Ferrexpo is actively implementing projects to decarbonize and reduce fossil fuel consumption. The company plans to start designing new solar generation capacities, which will complement the company’s existing 5 MW solar power plant, which is working to meet production needs. Engineering for the electrification of mining transport is also underway.

ArcelorMittal Kryvyi Rih

In 2022, ArcelorMittal Kryvyi Rih invested a total of $181.4 million in production development, with capital investments amounting to $112.8 million of this amount. According to the company, in the context of a full-scale invasion, projects were implemented that could have completely halted steel production and ore mining, including the construction of a new tailings dump called Third Map, as the company needs to store about 9 million cubic meters of tailings annually. At the same time, the existing tailing dumps have almost exhausted their resources.

However, due to the full-scale invasion, the company temporarily excluded the construction of a pelletizing plant, which was supposed to cost $250 million, from the current list of capital investment projects, but is ready to return to it after the war ends.

Kryvyi Rih Iron and Steel Works was ranked 8th in the December rating of Ukrainian Forbes among the 200 largest private and state-owned companies in Ukraine in terms of capital investments made in 2021-2023.

In 2023, the company’s top priorities remained the Third Map tailings dump and the overhaul of blast furnace No. 6 (the extended repair of the second category was completed in April this year and lasted 296 days). Among the key projects of the past year, the company also mentioned the technical improvement of the automated control systems of rolling mills and their product mix (wire mill 1, small section mill 2) and sinter shop No. 2, maintenance of the technical condition of other operating assets, and occupational safety.

This year, ArcelorMittal Kryvyi Rih plans to increase its capital investments by almost 20% to $155 million. They are currently being made at the expense of the parent company. In the spring of 2024, the company received approval from the Ministry of Environment for the construction of the Third Map tailings dump. The project will introduce additional storage capacity for tailings with a useful volume of 29.4 million cubic meters. The project is expected to be completed by the end of this year.

Nearest prospects

In the future, the Ukrainian iron and steelindustry will face the problem of underinvestment. Judging by the current market conditions, the company’s own funds will not be enough, so it will need to raise borrowed funds. Given the country’s rating, they will be expensive for Ukrainian steel companies, even if their own financial position is good.

In addition, the issue of servicing “old” loans remains extremely relevant for the industry, as representatives of the domestic mining and metals sector believe that current currency liberalization measures are insufficient.

A key risk for the industry in the short term will be the full launch of the European Carbon Border Adjustment Mechanism (CBAM) in 2026. The lack of investment during the war years will lead to difficulties in reducing the carbon footprint of Ukrainian steel products. As a result, Ukrainian producers may lose ground in the European market.

Iron and steel companies expect that Ukraine will be granted the status of a country excluded from the CBAM with a transition period. It is also important that the status of an associate member or quasi-member of the EU allows our country to have access to European funds for decarbonization projects. Already, one of the top topics for the industry is post-war development and investment in the context of the green transition as a chance for the country to integrate into the bloc’s economy.

However, GMK Center analysts expect the iron and steel sector to support the Ukrainian economy this year as the Black Sea ports reopen. The iron and steel sector will also remain key to economic development in the future, as it forms the basis for post-war recovery and transition to a low-carbon economy.