Businessman Rinat Akhmetov in Mariupol, where Metinvest’s metallurgical plants are located, announced his intention to continue investing heavily in the modernization and development of this largest Ukrainian mining and metallurgical holding.
“We continue to build, we continue to invest. This year, Metinvest will invest $1 billion in new production,” he said.
“We will build a new university, we will do everything in our power to ensure that there is a decent job in Mariupol, a decent salary, and most importantly, a happy life for people,” Akhmetov added.
The meeting is also attended by MP Vadim Novinsky, who is a co-owner of Metinvest.
Metinvest CEO Yuriy Ryzhenkov said that a decision, which had been made this year earlier than usual, to increase the holding’s salary by 10% on average from March 1 is made.
Ryzhenkov said that Metinvest has currently planned its investment program at $1.3-1.5 billion per year over the next three or four years, further investments will depend on how the company develops the green metallurgy.
The decarbonization trend is focusing on the steel industry, he said. However, there are already well-studied low-carbon technologies for direct reduced iron (DRI) and electrometallurgy (electric arc furnaces). Metinvest’s efforts in the field of decarbonization are connected not only with the climate, but also with renewal and entry into new markets (in terms of efficiency and product quality).
The updated technology strategy that the company continues to develop suggests different scenarios, but each of them includes a transition to low-carbon operations. The strategic goal is to reduce greenhouse gas emissions by more than 90% by 2050 using a phased approach with key milestones in 2030 and 2040. The final stages of the strategy are expected to include the use of hydrogen.
Metinvest is the largest mining and metallurgical holding in Ukraine. The group’s enterprises are located mainly in the Donetsk, Luhansk, Zaporizhia and Dnipropetrovsk regions.
Metinvest’s main shareholders are the SCM group (71.25%) and Smart Holding (23.75%), which jointly manage the company.
Metinvest B.V. (the Netherlands), the parent company of the international vertically integrated mining and metallurgical group Metinvest, in 2021 increased payment of taxes by 2.4 times compared to the previous year, to UAH 52.7 billion.
According to preliminary data for 2021 released by the company, Metinvest Group, taking into account associated companies and joint ventures, transferred UAH 52.7 billion in taxes and fees to the budgets of all levels in Ukraine in 2021, which is 2.4 times more than in 2020.
At the same time, it is clarified that traditionally the largest payment is income tax. Last year, the Ukrainian enterprises of Metinvest, together with associates and joint ventures, replenished the state and local budgets by almost UAH 33 billion, which is more than six times higher than the year before last.
The second largest amount of payments is the social security tax, the payments of which in 2021 increased by 10% compared to 2020, to UAH 5.7 billion.
The third largest payment is personal income tax. Last year, Metinvest Group, together with associated and joint ventures, paid UAH 5.2 billion to the treasury of Ukraine, which is 11% more than similar payments in 2020.
At the same time, payment for the use of subsoil increased by a third compared to the year before last, to UAH 2.9 billion.
Significant sources of filling the state and local budgets in Ukraine in 2021 were also the environmental tax – UAH 894 million and land fees – UAH 857 million.
“The amount of taxes paid by Metinvest hit a record high last year. This was facilitated by a favorable market situation and improvement in the company’s operating efficiency. As one of the country’s largest taxpayers, we are pleased to do our part to support the country’s economy and the health and well-being of Ukrainians during the coronavirus pandemic,” Yuriy Ryzhenkov, Chief Executive Officer of Metinvest Group, said.
Metinvest currently has planned its investment program at the level of $1.3-1.5 billion per year over the next three to four years, further investments will depend on how the company develops green metallurgy, Metinvest Group CEO Yuriy Ryzhenkov said in an interview with Metal Expert. According to him, the decarbonisation trend focuses on the steel industry. However, there are already well-studied low-carbon technologies, including direct reduced iron (DRI) in combination with electric arc furnaces (EAF). Metinvest’s efforts in decarbonization are related not only to climate, but also to renewal and entry into new markets (in terms of efficiency and product quality).
The updated technological strategy, which the company is continuing to develop, involves different scenarios, yet each of them includes the transition to low-carbon operations. As for CO2-related objectives, the company’s strategic goal is to reduce greenhouse gas emissions by more than 90% by 2050, using a step-by-step approach with key milestones in 2030 and 2040. The final phases of the strategy are expected to include the use of hydrogen.
“In the meantime, today, unfortunately, there is still no method for producing cheap hydrogen in our country or anywhere else in the world. That is why we have set this timeframe, in the hope that a method will be found to produce cost-effective hydrogen,” the top manager said.
The plans are to increase efficiency and automate existing processes using DRI technology and electric arc furnace production at one of the factories: either in Zaporizhia or in Mariupol. Initially, it is possible to launch a new complex using natural gas.
“At the moment, we are still discussing its location, because we are not the only shareholder in Zaporizhstal, and, so far, we don’t see the willingness of the other party to participate in the development of the plant. So, there is still a ‘fork in the road’ as to whether Zaporizhstal should be an electric steelmaking plant or a cast-iron mill,” Ryzhenkov said.
According to him, for assets in Zaporizhia and Mariupol, they have already sent out requests for technical and commercial offers to major equipment producers and they are waiting for the results. “I think we will complete the feasibility study in the first half of 2022, and probably, by the end of the year, we will need to make a decision about the site where we will build the first facility,” Ryzhenkov said.
At the same time, conventional technologies, in his opinion, will remain, since it is unrealistic to immediately switch to a completely new production cycle and new technologies. “Even in Europe, from what we see of the plans of our peers, there is a gradual transition, and conventional technologies will remain in place for quite a long time – until 2040-45. But we should not forget that steelmakers in Europe will receive government support and financial incentives to introduce new technologies, while in Ukraine, we are trying to involve the state in this issue, but we have yet to receive any support. Therefore, it will be more difficult for us to achieve this goal,” the top manager said.
The Group is working to improve the quality of its raw materials, both iron ore and coke, thereby increasing the efficiency of the blast furnaces. In addition, by improving the quality of iron ore products, the company is preparing its raw material base for the next step: DRI.
According to the CEO, in 2021, Metinvest recalculated its Scope 1 emissions according to the new Ukrainian methodology, which was recently brought in line with the European approach. In 2020, direct greenhouse gas emissions (Scope 1) within the IFRS perimeter (i.e., excluding associates and joint ventures) amounted to 23.2 million tonnes of CO2 equivalent. In addition, the Group has calculated indirect greenhouse gas emissions for the first time (Scope 2). For 2020, they amounted to 2.7 million tonnes. The intensity of direct greenhouse gas emissions in 2020 from the Mariupol site was 2.4 tonnes of CO2 per tonne of crude steel produced.
“If we talk about the short-term outlook, our main investments will be directed at the production of high-quality raw materials at Northern Mining that can, in turn, be used further in green metallurgy, and they are estimated at almost $1 billion,” the CEO said, adding that one DRI module in combination with an EAF and casting costs at least EUR 1 billion. For the construction of a plant with a capacity of 4-4.5 million tonnes of electric steel, at least EUR 2 billion will be required.
“In order to change the technology completely, the estimated costs will be about $15-20 billion over the next decade. Here we need government support. But, today, there are not decarbonization programmes, or even any progress on developing them, in Ukraine. We aim to encourage the government to move in this direction,” the top manager said.
“We are now completing the calculations for the decarbonization roadmap and, I suppose, we will make it public in spring 2022. By the end of 2022, we expect to finalize our technological strategy… By 2050, we expect that our sinter production will be completely decommissioned, and we will switch to DRI with electric steel. By 2040, we intend, to a large extent, to substitute the old capacity with electric steel, but some will still remain in place,” Ryzhenkov said.
Revenue of Metinvest B.V. (the Netherlands), the parent company of the Metinvest mining and metallurgical group, in July this year increased by 1.6%, or $27 million compared to the previous month, to $1.749 billion from $1.722 billion.
According to the published preliminary unaudited consolidated monthly results of the company’s financial statements on Tuesday, the total EBITDA for July was $963 million, which is $32 million, or 3.4% more than in June ($931 million). At the same time, EBITDA from participation in the joint venture amounted to $173 million (in June – $126 million).
According to the report, the adjusted EBITDA of the group’s metallurgical division over July 2021 amounted to “plus” $420 million (in June – “plus” $401 million), including $51 million from participation in the joint venture ($28 million); EBITDA of the mining division – $610 million ($650 million), including from the joint venture – $121 million ($97 million). The management company spent $10 million ($30 million).
Total revenue in July consisted of the $1.362 billion revenue in the metallurgical division ($1.303 billion in June), and the $690 million revenue in the mining division ($713 million). Intragroup sales were $303 million ($294 million).
The total debt of Metinvest in July decreased by $10 million compared to June, to $2.449 billion from $2.459 billion. At the same time, the cash volume increased by $631 million, to $2.074 billion from $1.443 billion.
Funds used in investment activities amounted to $314 million, and in financial activities – $22 million.
Metinvest received $70 million from the resale of square billets (produced by Dniprovsky Iron and Steel Work) in July in the amount of 94,000 tonnes. In addition, $254 million was received from the resale of 225,000 tonnes of flat-rolled products, 79,000 tonnes of long products – $67 million, and 53,000 tonnes of cast iron – $44 million.
In general, the company in July sold 370,000 tonnes of semi-finished products for $287 million, 809,000 tonnes of finished metal products for $913 million, and 186,000 tonnes of coke for $87 million.
In July, the group sold 1.437 million tonnes of iron ore for $366 million, and 82,000 tonnes of coal concentrate for $12 million.
PrJSC Mariupol-based Illich Iron and Steel Works (Donetsk region), part of Metinvest Group, will allocate UAH 11.004 billion for the payment of dividends from retained earnings, Azovstal, also part of Group – UAH 7.718 billion, and PrJSC Dniprovsky Coke and Chemical Plant (Kamianske, Dnipropetrovsk region), part of Metinvest, – UAH 1.774 billion.
According to the official statements of the companies in the information disclosure system of the National Securities and Stock Market Commission, the sole shareholder of the three companies made decisions on the payment of dividends at the extraordinary shareholders’ meetings held on September 13, and on September 14 the companies decided to set the date for compiling the list of persons entitled to receive dividends – September 29, 2021.
Earlier it was reported about similar decisions of PrJSC Avdiyivka Coke and Chemical Plant on the direction of UAH 2.365 billion to dividends, and PrJSC Zaporizhkoks – UAH 3.867 billion.
Thus, a total of five Metinvest enterprises will allocate UAH 26.7 billion for dividend payments.
Revenue of Metinvest B.V. (Netherlands), the parent company of the Metinvest mining and metallurgical group, in June this year grew by 9.8%, or $153 million, compared to the previous month, to $1.722 billion from $1.569 billion.
According to the published preliminary unaudited consolidated monthly results of the company’s financial statements last week, total EBITDA in June was $931 million, which is $179 million, or 23.8%, higher than in May ($752 million). At the same time, EBITDA from participation in the joint venture amounted to $126 million (in May it was $147 million).
According to the report, the adjusted EBITDA of the metallurgical division of the group in June 2021 amounted to $401 million (in May it was $367 million), including $28 million from participation in the joint venture ($46 million); EBITDA of the mining division reached $650 million ($460 million), including $97 million ($101 million) from the joint venture. The management company spent $30 million ($5 million).
Total revenue in June consisted of $1.303 billion of the Metallurgical Division ($1.244 billion in May) and $713 million in the Mining Division ($583 million). Intragroup sales totaled $294 million ($258 million).
The total debt of Metinvest in June decreased by $466 million compared to May, to $2.459 billion from $2.925 billion. At the same time, the volume of funds increased by $204 million, to $1.443 billion from $1.239 billion.
Funds used in investment activities amounted to $37 million, in financial activities – $464 million.
Metinvest received $73 million from the resale of square billets (produced by DMK) in June in the amount of 102,000 tonnes. In addition, $225 million was received from the resale of 215,000 tonnes of flat products, $59 million from the resale of 68,000 tonnes of long products, and $53 million from the resale of 80,000 tonnes of pig iron.
In general, the company in June sold 440,000 tonnes of semi-finished products for $316 million, 814,000 tonnes of finished metal products for $849 million, and 162,000 tonnes of coke for $59 million.
In June, the Group sold 1.731 million tonnes of iron ore for $395 million, and 206,000 tonnes of coal concentrate for $29 million.
