In 2024, Metinvest Mining and Metallurgical Group significantly increased its total exports and sales of iron ore to more than 12 million tons and significantly reduced production costs, Metinvest CEO Yuriy Ryzhenkov said in an interview with Forbes Ukraine.
“We have fully returned to the operational efficiency improvement program. For example, we have reconfigured our business process to use our own raw materials. And by most indicators, I mean technical, technological, and production ones, we have returned to the best results of 2020-2021,” the CEO stated.
According to him, the main disadvantage is the electricity outage and problems with its import. Another problem is the increase in tariffs for the services of natural monopolists, primarily the increase in electricity transportation tariffs and logistics. In addition, the aggressor’s offensive towards Pokrovsk. As a result, the group was forced to suspend the mine’s operations due to the inability to ensure electricity supply and safety factors for employees.
“We were preparing for this and diversified our supply chain for the same coal – we contracted as much as we could from other companies and shipped it for Ukraine’s needs from our plant in the US. We will definitely not stop steel production because of the temporary shutdown of the Pokrovsk mine. But it will have a serious impact on the company’s economy. Instead of supplying coal via the nearest logistics route, from Pokrovsk to Zaporizhzhia and Kamianske, we will now have to buy coal all over the world, and the logistics component will have a significant impact on our production costs. In general, up to 10% of the cost of coal,” said the CEO.
Answering a question about Donald Trump’s economic policy and expectations for the consequences for the global economy, Ryzhenkov explained that “it is not really known which initiatives of Donald Trump are serious and which are working to raise rates or invite to a dialogue.”
“We see tumultuous actions that make waves in the entire global economy, currencies, and so on. How will it all end? When a major power like the United States turns to protectionism, it is a serious problem for the global economy and, by the way, for the United States itself. It’s just that they will feel the consequences later – in three to four years,” the top manager predicts.
In turn, he noted that Metinvest’s deliveries to the US are insignificant – not even within the margin of error: “The largest share is pig iron, which is not subject to duty, and I think this will not change – it is the raw material for the American economy.”
Speaking about staffing issues, the CEO said that more than 20% of the group’s employees, or 30% of those liable for military service, are currently mobilized. Ryzhenkov believes that we need a normal, well-thought-out reservation system that will allow us to work. Reservations are not a privilege for business, as some say, but an integral part of preserving the economic basis of the state’s defense capability. If the economy does not work, Ukraine will lose the war, despite the support of the West.
As for the export strategy, it has not changed much compared to the period before the full-scale war.
“There are our key markets – Ukraine, the EU countries, where we supplied more than 50% of our products before the full-scale invasion. And then there are all the others, the so-called balance markets, which are characterized by a more opportunistic approach to supply. When it’s profitable for us, we go there, and when it’s not profitable, we don’t go there,” the CEO stated.
The Group’s key markets for iron ore are the EU countries. And the company has expanded them, entering Scandinavia and the Nordic countries. What we cannot sell in the EU due to limited consumption volumes is sold to Southeast Asia: China, South Korea, and so on, said the company’s CEO.
“The main thing we have focused on is the production of iron ore with a higher iron content, which is now in demand. We have already mastered its production at our joint venture, Pivdennyi GOK. Before the full-scale invasion, we did it at our Central GOK,” explained the CEO.
Regarding the forecast – what factors will have the greatest impact on exports in 2025 and what are the potential critical risks – Ryzhenkov divides them into several blocks. The first is to maintain the competitiveness of Ukrainian producers in foreign markets. This requires that state-owned monopolies do not create additional tariff pressure on operating businesses.
The second is maintaining access to foreign markets (it is important to preserve the liberalization of steel trade with the EU, the US, and the UK) and strengthening sanctions against the Russian metals and mining industry, which continues to sell slabs and pig iron to the EU because of the position of certain countries.
The third is a consistent environmental and industrial policy of the state on eco-modernization and decarbonization. Ukraine needs a delay in the CBA because of the war. And confirming the criticality of booking and engaging veterans in the workforce will remain a relevant factor because of the risk of losing qualified personnel.
“As for new challenges, it is access to financing for modernization and green transition projects in the mining and metals sector, as well as ensuring stable demand for Ukrainian steel in the domestic market. But these topics are post-war, and we can talk about them separately when peace comes,” the expert believes.
Speaking about the energy independence of Metinvest’s enterprises, the CEO said that the group has its own generation, about 45-50 MW, which provides the most critical processes – about 10% of the company’s energy consumption. Another 40 MW of gas-fired generation is under construction, which will be commissioned in 2025, and solar panels are also being installed.
Regarding investments, the CEO emphasized that due to security risks, the company cannot invest in Ukraine as before. There were serious investment plans in Mariupol, Kryvyi Rih, Zaporizhzhia, and Kamianske. Nevertheless, in 2024, the total investment volume reached about $670 million at the group’s sites in Ukraine. This includes both OPEX and CAPEX. As soon as the company is able to attract financing, there will be plans for large projects.
This year, we also have many plans, for example, a tailings pulp thickening project at Northern GOK and the repair of blast furnace No. 9 at Kametstal are being implemented at our own expense. The volume of investments in these projects in Ukraine alone is about $50 million.
Investment plans abroad include the largest project for the coming years – the construction of a green steel plant in Italy. The estimated cost of the joint project is EUR 2.5 billion.
Among other potential acquisitions, the company is interested in Eastern and Southern Europe – regions where it is possible to create synergies with the group’s existing business processes and Ukrainian assets. The company may take part in a tender for the sale of the Polish plant Huta Chestochowa, which once belonged to the Industrial Union of Donbass.
“In Ukraine, we have a $8 billion strategy for the green modernization of Ukrainian enterprises for 7-10 years. We are ready to launch this strategy as soon as the war is over and Ukraine receives security guarantees,” Ryzhenkov added.
“Metinvest is a vertically integrated group of steel and mining companies. The group’s enterprises are mainly located in Donetsk, Luhansk, Zaporizhzhia and Dnipro regions. The main shareholders of the holding are SCM Group (71.24%) and Smart Holding (23.76%), which jointly manage it.
Metinvest Holding LLC is the management company of Metinvest Group.
