Foreign investors are not yet ready to finance projects in Ukraine due to weak demand for steel products and high risks.
Yuriy Ryzhenkov, CEO of Metinvest Group, said this in an interview with Bloomberg Television when asked about the impact of the war on investment in Ukraine, the need for peace guarantees and the company’s investment opportunities in neighboring countries.
“The situation in Ukraine remains quite complicated, and we do not see any slowdown in the war. On the contrary, the hostilities have become even more intense over the past six months. Consequently, the investment climate is still not favorable for investments in Ukraine. However, as an international player, especially in European markets, Metinvest has decided to launch a project to build a green steel plant in Italy. This plant will be a pilot project for us and our partner Danieli to restore the Ukrainian steel industry after the war is finally over,” the CEO said.
According to him, freezing the war is not enough, as Ukraine has a negative experience with the Minsk agreements. Therefore, the country now needs reliable security guarantees, and this is the only way to attract large investments, including in green steel. Before that, it is unlikely that significant investments will come to the country.
Regarding the project in Italy, the company’s CEO said that its cost is estimated at EUR 2.5 billion and will be financed through equity investments, as well as mainly with the support of loans from European financial institutions, including state and public funds.
“If we are talking about Ukraine, we will need the same amount of investment to change the Ukrainian steel industry. That is why I emphasize that without the final end of the war and reliable security guarantees, the implementation of these plans in the near future looks unlikely. It is hard to imagine that investors would agree to invest substantial funds in the modernization of the Ukrainian steel industry in the current environment,” Ryzhenkov explained.
He reiterated the need for at least security guarantees: “I’m not sure what kind of peace agreements should be signed, but security guarantees should come from our allies and partners – from the United States and Europe. And they must be strong enough to convince investors that this is a real end to the war and that Russia will not attack again in a few months or years.”
The CEO also noted that investors are simply not investing at the moment: investments supported by European and other governments are being implemented, as well as state investments. However, private investments have been suspended, and investors are waiting for the situation to be clarified.
At the same time, the CEO explained, “we are open to any projects that can provide synergy with our resource base in Ukraine. We are considering the possibility of acquiring and modernizing facilities that do not yet belong to the category of decarbonized steel, but have the potential to become so. There are several facilities in neighboring countries that meet this criterion, but I will not name them, as this may affect the negotiations.”
In addition, the company is studying distressed steel assets with decarbonization potential that can be restored and brought back into operation – these assets are mainly located in Southern and Eastern Europe, which is the region of the group’s operations, and that is why they attract Metinvest’s attention.
Answering a question about the situation on the steel markets, the CEO stated that demand in the steel industry remains weak, especially in Europe.
“Steel companies across Europe are facing difficulties. However, steel remains the most versatile material in the world, and the industry is highly cyclical. So we are currently in the downward stage of the cycle, but we know that a recovery is inevitable in the future. That is why we are ready to invest today to take advantage of future growth,” Ryzhenkov summarized.
“Metinvest comprises mining and metallurgical enterprises located in Ukraine, Europe and the United States. Its major shareholders are SCM Group (71.24%) and Smart Holding (23.76%), which jointly manage it.
Metinvest Holding LLC is the management company of Metinvest Group.
