Ukraine’s steel producers paid $6.2 billion in taxes and fees over 5 years

In 2024, payments to budgets of all levels from the companies of the industry increased by 36% – up to 32.4 billion UAH

With the war now in its third year, securing revenues for state and local budgets has become critical for financing the country’s defense, social support and reconstruction. In this context, steel sector plays an important role in filling the budget despite all the wartime challenges.

For its part, the state should seek a balance between the need to replenish the budget and create conditions for sustainable development of the steel industry. It is important to ensure stability of tax legislation, predictability of tariff regulation and support for enterprises that face difficulties due to the war.

Tax figures

Despite the war and destruction, steel enterprises continue to operate and pay taxes to the state and local budgets, contributing to the support of the country. Tax payments of steel industry include profit tax, unified social contribution, personal income tax, payment for land and subsoil use, as well as other types of taxes and fees.

According to the results of the last year, payments to the budgets of all levels of the four largest steel companies increased by 36% – up to UAH 32.4 billion.

In 2024, all major steel producers increased payment of taxes and fees to budgets of all levels:

• Metinvest – by 36%, up to 19.8 billion UAH;
• ArcelorMittal Kryvyi Rih – by 60%, up to UAH 6.6 bln;
• Interpipe – by 27%, to UAH 5.5 bln.

In total for 5 years, the largest steel companies have paid taxes and fees in the amount of UAH 190 billion, or $6.2 billion. At the end of 2024, payment of taxes and fees of four steel companies amounted to 1.6% of revenues to budgets of all levels.

Under current conditions, any financial revenues to the state budget are a direct contribution to the country’s defense capability, as all taxes and fees collected within the country are spent for defense purposes, while social expenditures are financed by international financial aid. In addition, separately, companies in the industry actively finance aid to the AFU and local communities in the regions where they operate.

“The war increases the level of responsibility of business to the army, the economy and every Ukrainian. Despite all the challenges, we have not only maintained stability but also managed to reach the tax payment level of 2022, when we had a certain pre-war safety margin. This demonstrates our ability to adapt and find new opportunities. “Metinvest remains one of the largest taxpayers and private donors to the Armed Forces of Ukraine, and we continue to support the country in these difficult times,” emphasizes Yuriy Ryzhenkov, CEO of Metinvest.

The real situation in the industry

Due to the full-scale war, the steel industry has suffered more than any other sector of the Ukrainian economy and has been working in survival conditions for the third year in a row. Such facts speak most eloquently about the real situation in the industry:

1. Steelmakers have lost 2 largest plants and more than 40% of steel production due to the occupation of Mariupol.
2. The cost of logistics at the beginning of the war increased 4-5 times. Later freight tariffs were lowered, but they are still 2 times higher than before the war.
3. Enterprises have practically no possibility to attract external financing, given the war risks.
4. At the end of 2024, mining of high quality coking coal was stopped at the Pokrovsk Mine Administration, which accounted for 66% of the domestic market in 2024. This situation forces to start importing 2.5 mln tons of coking coal or coke.
5. Steel companies continue to operate in frontline regions, which are under daily shelling.

“Despite hostilities in Ukraine, the Company continues to produce and to export added value products. This is the key to ensure that thousands of Ukrainians in the frontline region are provided with jobs, and the country receives foreign exchange earnings,” says Sergiy Kuzmenko, Interpipe’s Director for Economics and Finance.

6. For 2022-2023, the four largest steel enterprises received UAH 122 billion of net losses.

The largest plants of Ukrainian steel producers are located in frontline regions, being under constant fire – Interpipe (Nikopol and Dnipro), Metinvest (Zaporizhzhia). A very important role of steel plants in these cities, providing employment and jobs – paying local taxes.

Currently, Ukrainian steel companies are in the most difficult situation among all sectors of the Ukrainian economy, and 2025 may well be one of the most difficult years for the Ukrainian steel industry.

Impact of high tariffs on steel sector

Currently, the attempts of the industry’s enterprises to maintain production levels are facing tariff pressure from natural monopolies. It is estimated that the growth of tariffs of state monopolies will cost businesses at least 60 billion UAH.

A typical example is ArcelorMittal Kryvyi Rih, which has been operating at a loss for the last three years. In 2022, the company finished with a record loss of $1.2 billion, in 2023 and 2024 the negative financial result was much lower, but still at an appreciable level – about $100 million annually. The enterprise survives and even continues to work thanks to external support from an international corporation.

At the end of last year, the company planned to reach at least “zero”, but it did not happen due to the growth of electricity tariffs and the high cost of logistics. Now the plans of ArcelorMittal Kryvyi Rih to break-even have been postponed to 2025.

“In 2024 the company strove to break even and carried out significant internal work to reduce costs. However, instability in energy supply due to enemy attacks, high electricity tariffs and the need for electricity imports, expensive logistics cost, unfavorable situation in global markets have, unfortunately, created additional obstacles. For the third consecutive year we still work with a loss. Despite all this, we continue to work on the improvement of operational and financial performance in order to be able to provide future development of the company and its staff, as well as provide stable tax revenues to the state budget and local communities,” Pavlo Zadorozhny, Chief Financial Officer of ArcelorMittal Kryvyi Rih, emphasizes.

However, these intentions may be offset by a 30% increase in electricity transmission tariffs since the beginning of this year and a likely 37% indexation of railroad freight transportation tariffs.

It is important to note that the possibilities of increasing taxes on steel industry are not unlimited. Excessive tax pressure can lead to a decrease in the competitiveness of enterprises. Increasing tariffs increases the costs of steel enterprises, but they themselves cannot automatically put them into the price, as the products are sold on export markets at international prices.

Already now, steel enterprises are facing rising costs due to tariff increases and as a result may reduce production or stop production altogether. When an enterprise is idle, the state budget does not receive tax revenues, and natural monopolies, which dream of raising tariffs, will be left without income.

Increase of tariffs cannot contribute to increase of economic activity and improvement of competitive positions on foreign markets, where steel products of Ukrainian companies compete with the same products made by other companies, which do not have to overcome the negative consequences of the war.

In the dry residue

Under the most difficult conditions, steel companies continue to work and fulfill their social functions, but the state should not be a cerberus threatening fines and tariffs, but a partner for business. This has already been realized in Brussels, where the discussion on supporting the steel industry in EU countries is actively underway.

There is a scenario that 2025 could become a second 2022 – the year of the strongest drop in production and the consequences arising from this fact.

“The pessimistic scenario for Ukrainian steel industry in 2025 in this context is a halving of steelmaking, which may be further aggravated by an increase in freight tariffs of Ukrainian Railways and for power transmission, power shortages and other negative factors,” emphasizes Olexander Kalenkov, president of the association of enterprises Ukrmetalurgprom.

In case of shutdown of steel enterprises, the country risks losing not only source of raw materials for industry and defense sector, but also revenues to the state and local budgets, as well as a source of its own resources for the country’s recovery after the war and further economic development.