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.
Metinvest Mining and Metallurgical Group is ready to invest in Europe and expand its presence in the market, including steel production, and is currently in the process of mergers and acquisitions of some European steel assets, said Alexander Vodovez, Chief Executive Officer of the Group, at the European Business Summit in Brussels.
“We are negotiating with several European companies to come to Ukraine. We are currently in the process of merging and acquiring some European steel assets, as we have a huge resource base and want to use it properly,” said the top manager.
According to the head of Metinvest’s CEO’s office, before the war, the group employed about 120,000 people and accounted for about 5% of Ukraine’s GDP. But with the start of the full-scale invasion, the company lost almost 50% of its enterprises, particularly in Mariupol and Avdiivka. Today, Metinvest employs about 60,000 people in Ukraine, Italy, the United States, Bulgaria and the United Kingdom. About 9,000 of the company’s employees serve in the Ukrainian Armed Forces, and about 1,000 employees have been killed. The group’s enterprises operate under the threat of shelling, with some facilities located just 10 km from the frontline.
Vodoviz emphasized the importance of entering the EU market, especially as Ukraine fights Russian aggression.
“Ukraine has the largest resource base on the European continent. And we can offer Europe access to these resources. In return, we want access to European technologies and the financial system to implement projects both in Ukraine and in the EU. But we do not need free money – we are ready to compete. We are ready to be part of the economic society of Europe and want this accession process to be completed as soon as possible,” stated the head of Metinvest’s CEO’s office.
At the same time, he clarified that the main obstacle for Ukraine on its way to European integration is the war: “We cannot simply turn a blind eye to the war, but our government has a homework assignment – to go through all the procedures for joining the European Union: monitoring, enforcement of laws, etc.” The top manager emphasized that Ukraine’s European integration will help ensure the strategic autonomy of the European steel industry from Russia.
Metinvest Group’s Central, Ingulets and Northern Mining and Processing Plants (MPPs), which were transformed into United Mining and Processing Plants (UMPP) in January-September 2024, paid UAH 4.7 billion in taxes, up twice year-on-year.
According to the company’s press release on Thursday, in the same period last year, the GOKs paid UAH 2.3 billion.
Igor Tonev, CEO of the GOKs, noted that despite the wartime situation, Metinvest’s GOKs remain not only an economic support for the region but also the largest employer.
“We continue to implement a veteran policy for defenders who are gradually returning to their jobs from the front, retrain our specialists and train new team members, adapt and create the most efficient model of mining enterprises today. In addition, mining and processing plants systematically support Kryvyi Rih and communities by implementing joint humanitarian, educational and infrastructure projects,” Tonev emphasized.
As reported earlier, Metinvest is implementing a new model for the operation of Kryvyi Rih mining enterprises, uniting the mining and processing plants in Kryvyi Rih under a single management.
“Given the current challenges, with no objective way to bring the workload of the GOKs to the optimal level, we are looking for the effect of combining their capabilities and business processes. To this end, the company sees its GOKs not as separate facilities with separate teams, but as one large production site and one large team, and tries to use the advantages of each GOK in a single technological chain. The creation of a single administrative and management center, so to speak, a consolidated GOK, will significantly simplify, speed up and increase the efficiency of these processes, as well as contribute to the creation of new synergies between the enterprises,” explained Yuriy Ryzhenkov, CEO of Metinvest, earlier.
“Metinvest comprises mining and metallurgical enterprises located in Ukraine, Europe and the United States. Its main 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.
“Metinvest, Ukraine’s largest mining and metals holding, increased its total production of iron ore concentrate (IOC) by 63% year-on-year to 12.239 million tonnes in January-September this year, and pellets by 15% to 4.570 million tonnes, but reduced its total output of coking coal concentrate by 25% to 3.220 million tonnes.
According to the operating report of the parent company Metinvest B.V. on Monday, in March-July 2024, Ukraine experienced power supply restrictions due to Russian shelling and high demand for imported electricity. Since August, the situation has stabilized, but the unfavorable conditions on the iron ore market have led to a decline in production.
The Group’s mining and processing plants continued to operate at varying levels of capacity utilization, taking into account the availability of electricity, its cost, market prices for iron ore products and other factors to ensure efficient production. As a result, in Q3 2024, total iron ore concentrate production decreased by 17% quarter-on-quarter to 3.347 million tonnes; production of saleable iron ore products decreased by 15% to 3.231 million tonnes, including iron ore products by 16% to 1.854 million tonnes, and saleable pellets by 14% to 1.377 million tonnes.
Amid the unblocking of Ukrainian Black Sea ports from August 2023 and an increase in the order book for pellets, total iron ore production increased by 63% to 12.239 million tonnes in the first nine months of 2024 compared to the same period of the previous year. At the same time, the output of commercial iron ore products increased by 84% to 11.446 million tons, including a 3.1-fold increase in the production of commercial iron ore products to 6.876 million tons and 15% increase in commercial pellets to 4.570 million tons.
Since February 2024, Russian troops have concentrated their efforts on several fronts, including the Pokrovske direction, located near the Pokrovske coal group. Russian troops captured a number of towns and villages in the region and shifted the front line. Intense fighting and massive shelling continue in the area. Management is closely monitoring the situation and is taking all possible measures to minimize any potential negative consequences for the group, the statement said.
In the third quarter of 2024, the group’s production of coal concentrate increased by 14% quarter-on-quarter to 1.135 million tons. The main factor was a 17% increase in production volumes at Pokrovske Coal Group to 658 thousand tons. Despite the intensification of military operations in the Pokrovske area, production increased due to the commissioning of an additional longwall, which increased mining productivity and improved the quality characteristics of Ukrainian coking coal.
United Coal Company’s (USA) coal concentrate production increased by 9% quarter-on-quarter to 477 thousand tons due to increased production at some Affinity mines, mainly on the back of growing demand for coking coal.
For 9M2024, the Group’s coal concentrate production decreased by 25% year-on-year to 3.220 million tonnes, in particular due to a 23% decrease in production at Pokrovske Coal Group to 1.860 million tonnes, mainly as a result of optimization of mining operations due to changes in mining and geological conditions; at United Coal Company by 28% to 1.360 million tonnes due to the cessation of production at Carter Roag mines and a decrease in production at some Wellmore mines.
“Metinvest comprises mining and steel production facilities 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.
“Metinvest, Ukraine’s largest mining and metals holding, increased steel production by 5% year-on-year to 1.610 million tonnes and pig iron production by 2% to 1.367 million tonnes in January-September this year, but reduced total coke production by 11% to 846 thousand tonnes.
According to the press release of the parent company Metinvest B.V. on the operating results for 9M2024, due to the start of Russia’s large-scale military aggression against Ukraine on February 24, 2022, the group’s Ukrainian enterprises (except for those located in Mariupol and Avdiivka) continue to operate at different levels of utilization due to security, staff availability, electricity supply, as well as logistical and economic factors.
At the same time, in the third quarter of 2024, pig iron and steel production at Kametstal remained almost at the level of the previous quarter and amounted to 483 thousand tons and 568 thousand tons, respectively.
In the first nine months of 2024, steel production increased due to an increase in the order book for steel products.
In the third quarter, production of finished products decreased by 19% quarter-on-quarter to 491 thousand tons. In particular, flat products production decreased by 29% to 185 thousand tonnes, which was driven by several factors: first, the irregular operation of Ferriera Valider (Italy), which depends on marginal orders amid unfavorable European market conditions; and second, the scheduled overhaul of the rolling mills in Italy and the UK in August.
Production of long products decreased by 11% to 306 thousand tons due to the scheduled shutdown of Promet Steel (Bulgaria) for overhaul in August.
In January-September 2024, production of finished products decreased by 3% compared to the same period in 2023, to 1.678 million tons. In particular, flat products production decreased by 14% to 729 thousand tonnes over the nine months due to unfavorable conditions in the European market, which resulted in the absence of marginal orders for hot-rolled coils and a decrease in the order book for hot-rolled plates. At the same time, production of galvanized cold-rolled coils increased by 65% as Unisteel’s 4th inductor in Ukraine resumed operations after it was shut down for overhaul in Q2 last year.
Production of long products increased by 8% to 949 thousand tons due to an increase in the order book for Kametstal and Promet Steel products.
In the third quarter of 2024, coke production remained at the level of the previous quarter and amounted to 282 thousand tons.
In 9M2024, coke production decreased by 11% year-on-year due to the shutdown of some coking chambers at Kametstal’s coke oven battery No. 1 in early 2024.
“Metinvest comprises mining and steel production facilities 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.
Metinvest Group’s Zaporizhzhia-based steel and mining enterprises, Zaporizhstal, Zaporozhogneupor, Zaporozhkoks and Zaporizhzhia Foundry and Mechanical Plant (ZLMZ), increased their payments to budgets of all levels by 35% year-on-year in January-September this year, totaling more than UAH 2.1 billion in taxes and fees.
According to the group’s press release on Friday, the most significant payments in terms of volume are the unified social tax and the single personal income tax. A significant share of deductions is also accounted for by the payment of environmental and land taxes and military fees.
“Metinvest Group’s enterprises remain among the largest taxpayers in Zaporizhzhia. In the first nine months of this year, Metinvest’s steelmakers paid almost UAH 700 million to the local budget, a quarter more than last year. Taxes are the basis of the public sector and the foundation for sustainable development of the frontline region. That is why, despite all the difficulties of wartime, our enterprises remain a reliable pillar of Zaporizhzhia,” said Taras Shevchenko, acting CEO of Zaporizhstal.
At the same time, the company’s enterprises in the region systematically implement socially important projects to reintegrate war veterans and support their families, help vulnerable groups of the population, assist in eliminating the consequences of shelling and restore destroyed infrastructure.
As reported earlier, including associates and joint ventures, Metinvest Group increased its tax payments to the Ukrainian budget by 38% to over UAH 15 billion in the first nine months of 2024. Since the beginning of the full-scale invasion, Metinvest has allocated UAH 7.5 billion to help Ukraine and its citizens, including UAH 4 billion for the needs of the army as part of Rinat Akhmetov’s Steel Front military initiative. The Group remains a reliable support for the country in its fight against the enemy.
In 2023, Metinvest’s Zaporizhzhia enterprises paid more than UAH 2.1 billion to the budgets of all levels, including more than UAH 818 million to local budgets. At the same time, under martial law, they waived tax benefits worth more than UAH 350 million in favor of the state.
Taking into account its associated companies and joint ventures, Metinvest paid UAH 14.6 billion in taxes and fees to the budgets of all levels in Ukraine in 2023. Since the beginning of the full-scale war, the Group has allocated UAH 4.8 billion to help Ukraine and its citizens, including more than UAH 2.5 billion for the needs of the army.
In 2022, Metinvest’s Zaporizhzhia enterprises paid about UAH 3.4 billion to budgets of all levels, including almost UAH 820 million to local budgets last year.
“Zaporizhstal is one of the largest industrial enterprises in Ukraine, whose products are widely known and in demand in the domestic market and in many countries around the world. “Zaporizhstal is in the process of being integrated into Metinvest Group, whose major shareholders are System Capital Management (71.24%) and Smart Holding Group (23.76%). Metinvest Holding LLC is the management company of Metinvest Group.
