Metinvest B.V. (the Netherlands), the parent company of the Metinvest mining and metallurgical group, in January-June 2020 reduced capital investments by 35% compared to the same period in 2019, to $ 313 million.
According to preliminary unaudited interim financial results for the first half of 2020, the capex reduction was planned during this period.
“In line with the group’s 2020 capex priorities for critical asset maintenance and the completion of ongoing strategic investment projects, investments in maintenance and repairs decreased by 33%, while investments in strategic projects were reduced by 38%, which brought their share in capital investments to 65% and 35%, respectively (63% and 37% in the first half of 2019),” the report states.
At the same time, it is clarified that the metallurgical segment accounted for 47% of capital investments (50% in the first half of 2019), and the mining segment for 49% (46% in the same comparison).
The Northern Mining and Processing Plant (Northern GOK, Kryvy Rih, Dnipropetrovsk region), which is the part of the Metinvest Group, will invest UAH 2.3 billion in environmental protection measures in 2020.
Metinvest Kryvyi Rih said on Facebook on Thursday, August 20, that Northern GOK continues seeking effective ways of environmental protection.
“This time peat hydroxide reagent was successfully tested during the blasting operations in the mine. Earlier, spraying of the reagent in the Hannivsky mine helped to reduce dusting by 30% and gas emission by 70%,” it said.
As reported, Metinvest plans to invest UAH 3.1 billion in the modernization and overhauls of equipment and construction of strategic facilities at Northern GOK in 2020.
Northern GOK is a part of the Metinvest Group, the main shareholders of which are JSC System Capital Management (SCM, Donetsk) (71.24%) and Smart Holding group of companies (23.76%).
The holding company of the Metinvest Group is Metinvest Holding LLC.
Revenue of Metinvest B.V. (the Netherlands, the parent company of the Metinvest group of steel and mining companies, grew by 13.6% in May 2020 compared with the previous month, to $843 million from $742 million.According to unaudited operational results posted by the company on Tuesday, EBITDA in May was $162 million, which is $36 million more than in April ($126 million), EBITDA from participation in JV was $16 million ($15 million in April).
According to the report, adjusted EBITDA of the metal division of the group in May 2020 totaled $39 million ($64 million in April), including minus $6 million from participation in JV (minus $1 million), EBITDA of the mining division was $112 million ($94), including from participation in JV $22 million ($16 million). Expenses of the managing company were $7 million ($6 million).
Total revenue consisted from revenue of the metal division in the amount of $631 million ($580 million in April), revenue of the mining division totaling $291 million ($240 million) and intra-group sales totaled $79 million ($78 million).
Total debt grew by $25 million in May, to $3.098 billion. At the same time, the amount of cash decreased by $10 million, to $260 million from $270 million.
The funds used in investing activities amounted to $95 million, in financial activities $27 million.
Moody’s Investors Service has upgraded corporate family rating (CFR) and probability of default rating (PDR) of Metinvest B.V. (Metinvest) to B2 from B3. Concurrently, the rating outlooks on Metinvest’s ratings were revised to stable from positive, Moody’s has said in a press release.
The stable outlook on Metinvest’s ratings is in line with the stable outlook on Ukraine’s sovereign rating, and reflects Moody’s expectation that the company will sustain strong operating and financial performance for their rating level and will maintain healthy liquidity.
Metinvest has fairly broad goals of reducing environmental footprint and introducing more efficient energy-saving technologies in order to meet the best global standards in this area. In 2019, Metinvest spent around $384 million (2018: $263 million) in environmental projects, including $155 million of capital spending.
“Being a vertically integrated company, Metinvest takes responsibility for the whole production chain and continues to improve the environmental footprint of its segments,” Moody’s said.
The corporate governance risks are mitigated by the fact that Metinvest demonstrates a good level of public information disclosure, including a track record of regular public reporting of audited consolidated financial statements prepared in accordance with IFRS as well as quarterly operational reporting.
Metinvest Group is a vertically integrated group of steel and mining companies that manages every link of the value chain, from mining and processing iron ore and coal to making and selling semi-finished and finished steel products. It comprises steel and mining production facilities located in Ukraine, Europe and the United States, as well as a sales network covering all key global markets.
Metinvest, an international vertically integrated group of mining and metallurgical companies, has conducted a comprehensive assessment of its environmental performance, social policy and corporate governance (ESG) with the assistance of Sustainalytics, a leading independent provider of research, ratings and data in the field of ESG.
“This is the first time that Sustainalytics has assessed Metinvest’s ESG performance using its ESG Risk Ratings methodology. An ESG Risk Ratings score is a measure of unmanaged ESG risks on an absolute scale of 0-100, with a lower score signaling less unmanaged ESG risks,” the group said on its website.
“Metinvest received an overall ESG Risk Rating score of 32.0. While the risk of experiencing material financial impacts driven by ESG factors was assessed as high due to the steel industry’s significant exposure, Sustainalytics recognized the Group’s management of material ESG issues as strong,” the report says.
“Notably, Metinvest’s management in such areas as human capital, occupational health and safety, as well as community relations was assessed as strong. In addition, Sustainalytics assigned a high score for the group’s corporate governance and its adherence to high standards of business ethics,” it says.
“When compared with industry peers, Metinvest is ranked at ninth place out of the 140 steel companies assessed by Sustainalytics worldwide,” according to the document.
“We recognize that mining and steel manufacturing always have a high level of exposure relative to many other industries. Metinvest consistently takes into account environmental, social and governance factors in its business decisions, therefore we have launched our first external assessment in the ESG field as part of our overall commitment to business transparency. We believe that measuring our ESG performance helps us to better understand our strengths and weaknesses for further sustainable development. We have received vital feedback and analyzed how we can build more robust risk management institutions to ensure the group’s continued industry leadership,” Yuriy Ryzhenkov, the Chief Executive Officer of Metinvest, said.
“ESG topics are gaining importance worldwide for all groups of stakeholders, including lenders. We believe that this rating assigned to the group by Sustainalytics will help to alleviate the decision-making process in funds allocation for our existing and future investors and creditors,” Oleksandr Liubarev, the Corporate Finance and Treasury Director at Metinvest, said.
Metinvest, the largest Ukrainian mining and metallurgical holding, took 42nd place in the list of the largest world steel producers with a volume of 9.58 million tonnes in 2019 compared to the 42nd place with a volume of 9.37 million tonnes of steel in 2018, the 42nd place with a volume of 9.59 million tonnes in 2017, the 37th place with a volume of 10.34 million tonnes of steel in 2016, the 40th place (9.65 million tonnes) in 2015 and the 33rd place (11.18 million tonnes) in 2014.
According to the list of the main global manufacturers, compiled by the World Steel Association (Worldsteel), ArcelorMittal remained the largest steel company with a production volume of 97.31 million tonnes in 2019 (96.42 million tonnes in 2018). It is followed by China Baowu Group with 95.47 million tonnes (67.43 million tonnes), Nippon Steel with 51.68 million tonnes (49.22 million tonnes), HBIS Group with 46.56 million tonnes (46.8 million tonnes) and POSCO with 43.12 million tonnes (42.86 million tonnes).
According to the results of each year from 2014 to 2019, there are no Ukrainian companies in the list of the 50 largest world steel producers, except for Metinvest. The Industrial Union of Donbas Corporation, which ranked 44th with a production volume of 7.9 million tonnes in 2013, according to the results of recent years dropped out of the leaderboard.
Among Russian companies, NLMK took 21st place with a volume of 15.61 million tonnes (the 17th place with 17.39 million tonnes in 2018), Evraz group took 28th place with 13.81 million tonnes (the 30th place with 13.02 million tonnes), Magnitogorsk Iron and Steel Works took 32nd place with 12.46 million tonnes (31st with 12.66 million tonnes), Severstal took 37th place with 11.85 million tonnes (the 34th place with 12.04 million tonnes).
According to Worldsteel, Ukraine produced 20.8 million tonnes of steel and took 13th place in 2019 (while 21.1 million tonnes, 13th place in 2018), cast iron production amounted to 20.1 million tonnes (20.6 million tonnes), while the country exported 2.6 million tonnes of cast iron in 2019, and the apparent consumption of cast iron in Ukraine amounted to 17.5 million tonnes. The apparent steel consumption amounted to 4.8 million tonnes in Ukraine in 2019 (compared to 4.7 million tonnes in 2018), while consumption per person reached 108.1 kg (compared to 107.2 kg per person in 2018).
