Mining and metallurgical companies do not stop implementing projects to reduce pressure on the environment during the crisis

The COVID-19 coronavirus pandemic and the resulting quarantine restrictions could affect the dynamics of investments. Anticipating difficult times, the business has optimized development costs. As a result, capital investments in Ukraine in the first half of this year decreased by 34.9% – up to UAH 163.8 billion.

Nevertheless, the companies of the Ukrainian mining and metallurgical complex generally did not stop the implementation of projects aimed at reducing the impact of production on the environment. The main incentives for maintaining the volume of environmental investments at the proper level are the following:

  • the need to modernize old equipment that does not meet modern environmental requirements;
  • the state of the environment is a socially significant topic, which is constantly paid great attention to by local communities and authorities;
  • high probability of tightening the requirements for the environmental friendliness of the production of metal products by the European Union.

These factors motivate Ukrainian mining and metallurgical companies to adhere to the principles of sustainable development and actively invest in environmental protection. The share of investments of mining and metallurgical enterprises in environmental activities in the structure of expenses of all economic entities of Ukraine reached 36.7% last year.

Expenses of metallurgical and iron ore enterprises for environmental protection in 2019 increased by 21.5% compared to 2018 – up to UAH 16 billion. In particular, iron ore enterprises spent UAH 8.8 billion on environmental projects in 2019, and metallurgical enterprises – UAH 7.3 billion.

It should be noted that when assessing the volume of environmental investments, it should be taken into account that such investments can have a dual purpose – they can simultaneously improve both production and environmental performance. They can be direct and indirect. In addition, environmental investments can be capital and operational.

Mining and metallurgical companies themselves also name their own figures for eco-investments. As a rule, these are modernization, reconstruction, repair projects with a significant environmental component.


Metinvest’s environmental investments (capital and operating costs) in 2019 amounted to $380 million compared to $225 million and $263 million in 2017 and 2018, respectively. Last year, Metinvest’s environmental capital investments were aimed at:

  • reconstruction of the sinter plant Mariupol metal plant named after Ilyich;
  • projects at the MMPI that are at the implementation stage: construction new aspiration system at blast furnace No. 3, replacement of the gas cleaning system at oxygen converter No. 3 and repair of the sewerage system;
  • reconstruction gas cleaning systems of pig iron desulfurization plant, continuation overhaul of coke oven battery No. 1 at Azovstal;
  • extended repair coking chambers at the Avdiivka Coke Plant and “Zaporozhkokse”;
  • replacement of gas cleaning equipment at the pelletizing machine with North MPP ;
  • reconstruction of the tailing facilities and the circulating water supply system, as well as the current repair of the sludge pipeline at the Central MPP.

In the first half of 2020, Metinvest invested $231 million in environmental projects. In January-June, the company reduced capital investments by 35%, but redirected funds for eco-modernization, increasing environmental costs by 42% compared to the same period last year. In 2020, Metinvest’s environmental investments are expected to be even more than in 2019.

Metinvest’s eco-projects include the following: MMPI spent more than $31 million on a new aspiration system for blast furnace No. 3 and is completing the reconstruction of the sinter plant, in which investments amounted to more than $150 million UAH.

ArcelorMittal Krivoy Rog

AMKR in 2019 lowered total environmental costs by 6.2% compared to 2018 – up to UAH 562.9 million from more than UAH 600 million. In 2019, the company invested for environmental purposes in the following projects:

  • reconstruction of the rotary kiln No. 3 of the refractory-lime shop;
  • repair draft equipment and construction of two-stage gas cleaning units (GOU) as part of the reconstruction of sinter shop No. 2;
  • introduction of an automatic environmental monitoring system at the GOU from sintering zones;
  • start of ecological modernization of the fourth sintering machine;
  • reconstruction tailings “United” and “Mirolyubovskoye”, construction of the first stage of the tailings “Central” and their circulating water supply.

Already in the first half of this year, ArcelorMittal Kryvyi Rih invested in environmental projects UAH 389.2 million. In the process of implementation and in the near future – the reconstruction of gas cleaning equipment for sintering machines No. 2 and No. 3.

Total in 2006-2020 AMKR has invested more than UAH 7 billion in environmental modernization. During this period, the company reconstructed and built more than 130 highly efficient gas cleaning units. As a result, atmospheric emissions decreased by 42.7%, wastewater discharges – by 78.4%.

In general, AMKR plans to send $700 million for investment projects with an environmental component, gradually decommissioning obsolete capacities.


For the period 2018 – the first half of 2020, Ferrexpo for environmental projects sent more than 891 million UAH. Ferrexpo’s current eco-project budget for 2020 is $9.1 million. In addition, the company is implementing many small environmental improvement projects with a planned investment of $500,000.

In September 2019, every Ferrexpo mining and processing plant launched programs to improve the environment. In particular, their components are:

  1. Improvement system and emission control:
  • automated online monitoring of emissions – installation of sensors on process furnaces and a control post on the border of the sanitary protection zone;
  • biodiversity project – tracking biochanges and identifying workflows that can be modified to mitigate negative impacts;
  • “Green Office” project – introduction of green procurement in offices and use of materials with the best environmental performance;
  • water resources management – this year it is planned to analyze the operation of bioengineering facilities that are used to treat unbalanced waters of the PMPP tailings before being discharged into the Kamenskoye reservoir.
  1. Waste control:
  • waste analysis with division into resource and non-resource, separate collection of office waste;
  • implementation of hazardous waste management standards in accordance with the requirements of ISO 14001:2015.
  1. Greenhouse Gas Reduction Program “Zero CO2»:
  • electrification of internal railway transport, gradual shift away from the use of diesel fuel;
  • transition to energy efficient motors with low energy consumption.

Dneprovsky Iron and Steel Plant

DISP in 2016-2020 invested within the framework of 23 environmental measures, about UAH 1.5 billion. In particular, the company built:

  • installations “furnace-ladle” No. 1 and No. 2;
  • installations for the preparation and injection of pulverized coal into blast furnaces and rotary kilns;
  • casting of blanks  No. 3 with a closed water cycle;
  • mill “400/200” with a circulating water supply cycle.

DMK in May-June carried out a major overhaul sinter machine No. 10 to reduce harmful emissions. UAH 80 million was allocated for this project. It is also planned to reconstruct the gas cleaning systems of sintering machines Nos. 7-12.

Dneprovsky Metallurgical Plant

Since 2016, DMP has invested UAH 475 million in environmental programs. Part of these funds were invested in the program of repair work of the blast furnace and rolling mills, which lasted more than half a year since October 2019.

In 2018-2019 overhaul of blast furnaces No. 3 and No. 2 was carried out at the enterprise, in which more than UAH 600 million was invested. In 2019, coke oven battery No. 5 was overhauled, which made it possible to significantly reduce emissions. Overall, the plant reduced emissions by 35.3% in 2019. However, one of the factors of their reduction was the decline in production volumes. The company plans to overhaul coke batteries No. 1 and No. 2.

Incentive measures

Environmental projects remain a priority for Ukrainian mining and metallurgical companies this year, although the circumstances do little to promote this.

Under the influence of the coronavirus pandemic and quarantine restrictions, the investment situation in the country in the first half of 2020 deteriorated sharply. Capital investments in Ukraine decreased by 35.5% in the first quarter, and by 34.4% in the second.

In such a situation, the Ukrainian authorities should take care of maintaining the growth rate of environmental investments. After all, this is required by the international obligations of Ukraine.

The main measure to improve the situation in the issue of eco-modernization of production, which the state can take without much effort, is to change mechanism for using environmental tax. In other words, enterprises should be allowed to invest these funds in environmental protection measures. In particular, the business offers use 70% eco-tax for eco-projects of the enterprises themselves.

“Now the ecotax performs only a fiscal function (replenishes the state budget). Due to the targeted use of proceeds (for environmental activities, including those implemented by the corporate sector), it will also acquire a regulatory function. Thus, more environmental projects will be implemented and the technogenic load on the environment will be reduced to a greater extent,” notes Andrey Glushchenko , analyst at GMK Center.

Recall that now 45% of the eco-tax funds go to the general fund of the state budget, without a specific targeted use. The remaining funds (55%) are directed to special funds of local budgets, but even there they are used inefficiently due to the lack of tools and opportunities for local communities.

Other tools to stimulate eco-modernization in Ukraine are not yet used. Although it is their use that can have a greater effect on enterprises and the environmental situation.

According to Vladislav Varnavsky, head of the environmental protection department of Metinvest, Ukrainian metallurgy enterprises in terms of environmental friendliness of production lag behind metal enterprises, for example, Poland or the Czech Republic by about 10-15 years.

If Ukraine strives to follow the best European practices, the same Czech Republic and Poland, then it is necessary to adopt the experience of these countries. For example, in the Czech Republic, programs have been adopted at the state level and special funds have been created, with the help of which the state supports its industry. With the introduction of new environmental requirements, the state should create new levers, new incentives and motivational tools, including financial ones, to support producers.

“The state should develop common rules of the game together with business. Now we see a one-sided game: the new government is trying to adjust the legislative framework to European requirements and is trying to do everything as quickly as possible. However, there are the laws of the market, the laws of physics and, in the end, external factors. Take, for example, the COVID-19 pandemic. I believe that the state should sit down at the negotiating table with business and openly discuss options,” adds Vladislav Varnavsky.

Environmental threats

The main threat is the lack of system and inflexibility of the state environmental policy. The theme of ecology has never been in the government’s priorities, all issues are gradually being resolved only because there are international obligations of the country.

“I cannot say that the environmental policy in Ukraine is coherent and even more so balanced. Each new government brings us changes, and not only with elections, but with the change of ministers. Integrity depends on continuity. It was a good idea to introduce the positions of state secretaries in the ministries, who were the “custodians of sacred knowledge” about the achievements of previous colleagues. When everyone is changing, there should be someone who will tell the newcomers what has already been done. Still, we have been in the field of international obligations for a long time,” notes Vladislav Varnavsky.

Nevertheless, parliamentarians are very productive in terms of various environmental innovations, of which only a few are really aimed at improving the situation. Now the Government has registered draft laws aimed at resolving certain issues, in particular, those related to the reform of the environmental tax (No. 3543-1, No. 3631 and No. 3632) and waste management (No. 2207-1-d). The business has serious claims to the last document.

In addition, another innovation threatens the industry – the draft law on state environmental control (No. 3091). The document actually proposes to strengthen supervisory functions of the environmental inspection.

“This body will get more opportunities to conduct inspections and collect penalties. For developing countries, this is a common practice (to expand the powers of the environmental control body and thereby replenish the state budget). But since Ukraine is striving to comply with European requirements, a different approach should have been chosen: to focus on the development of an environmental monitoring system and, based on its data, control compliance with environmental standards,” emphasizes Andriy Glushchenko.

Environmental issues are becoming more and more relevant in the international context. A potential threat for Ukrainian metallurgists is the carbon tax (CBA, Carbon Border Adjustment), which is planned to be imposed on imports of metal products to the EU approximately from 2023.

“This tax de facto may close access to the EU market, which is important for Ukrainian steel companies. At present, the SVA mechanism is only being discussed. From the available information it follows that in order to exclude Ukrainian products from its effect, it is necessary to introduce greenhouse trading system and sign an agreement with the EU on a common move towards decarbonisation. Perhaps, in some form, this agreement will provide for participation in European Green Deal”, – Andrey Glushchenko explains.

The continuation of the eco-modernization of Ukrainian GMK enterprises has no alternative. The industry is making every effort within existing opportunities to invest and reduce emissions. The state can help speed up this process, from which everyone will benefit.

“The role of the state at the national and regional levels is very important in the environmental modernization of industry. This has been proven by the experience of the EU over the past 10 years, summarizes Stanislav Zinchenko, head of the committee on industrial ecology and sustainable development of the European Business Association, director of the GMK Center. “Fiscal and administrative methods alone cannot achieve sustainable development goals.”