Business news from Ukraine


21 November , 2020  

For its development, the Mining and Metallurgical Complex (MMC) of Ukraine requires an increase in annual investments to $2.3-2.4 billion by 2030 from $1.8 billion in 2019, CEO of GMK Center Stanislav Zinchenko said, presenting the study entitled “Metallurgy of Ukraine: Vision 2030” in Kyiv on Friday.
According to him, the country’s mining and metallurgical complex is currently a low-cost exporter of raw materials and semi-finished products, and by 2030 it should become a stable supplier of quality products, maintaining the position of the basic industry in the “new” economy.
He said that among the global trends is weak demand for steel in the coming decades – growth of less than 1% per year; excess steelmaking capacity and the development of protectionism, which leads to high competition in the markets; volatility in steel prices, it is also decarbonization, digitalization, possible changes in supply chains, an increase in the need for capital investments. In general, the situation is characterized by weak market conditions and low financial performance.
In the domestic mining and metallurgical complex, the strong side is vertical integration, the weak side is underinvestment, a high need for investments, large emissions of harmful substances into the environment, insufficient quality of finished products, dependence on exports, low consumption in the domestic market.
In turn, Chief Analyst at GMK Center Andriy Tarasenko identified five strategic areas for the mining and metallurgical complex: cost leadership, increased unit efficiency, environmental friendliness, strengthening the benefits of vertical integration, and diversification by product and market.
To implement these areas, it is necessary to reduce the cost of steel production, increase the share of output with high added value, boost steel consumption from 108 kg per person to 160 kg per person, which will ensure the growth of products with high added value by 38%. It is also required to improve environmental friendliness, reducing CO2 emissions by 20%, dust – by 50%. To increase the production of premium pellets with a high iron content and direct-reduced grade (DR) pellets by 10 million tonnes.
As part of the diversification of product markets it is necessary to expand the geography of sales and reduce dependence on countries with a high level of risk (trade, environmental, military).
Ukraine should pursue a policy of stimulating investment, developing the internal market, countering protectionism and implementing environmental programs, including by joining the European Green Deal.
According to the experts, in the case of such activities, the MMC of Ukraine by 2030 will increase steel production by 14.4% compared with 2019, to 23.8 million tonnes, and will increase foreign exchange earnings from exports by $600 million per year. At the same time, GDP will be additionally generated in the amount of $1.75 billion, tax revenues to the budget will increase by $400 million annually, and capital investments will increase by $1.3 billion.

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