Mining and metallurgical group “Metinvest” has carried out a number of reshuffles in its management, in particular, by expanding the area of responsibility of the general director of the Zaporizhzhya metallurgical plant “Zaporizhstal” Alexander Mironenko.
According to the official statement of the press service of the Metinvest group, in response to a corresponding request from the Interfax-Ukraine agency on Thursday, the changes in the organizational structure of Metinvest are due to the fact that the Russian military aggression against Ukraine led to the shutdown of the group’s enterprises in Mariupol and Avdiivka, the break sustainable technological and supply chains – both intragroup and external.
“In response to new challenges, Metinvest decided to change the organizational structure of the group, designed to improve the operating model of sales, logistics and purchases, to strengthen the company. Thus, the Commercial Directorate of the Metinvest Group was created on the basis of the Sales Directorate and the Logistics Directorate and procurement. Dmitry Nikolaenko headed the Commercial Directorate,” the response to the agency explains.
And it is added that the unification of the areas of logistics, sales and purchases and the creation of a single center for their coordination and management is aimed at the effective management of key cost processes in the company, at obtaining an additional effect from the synergy of these main functions and building an end-to-end process of their cross-functional interaction.
“The changes also affected the Operational Directorate of the Metinvest Group, which was headed by the General Director of Zaporizhstal Alexander Mironenko. He will also continue to act as the General Director of the joint venture of the Metinvest Group – the Zaporizhstal Combine,” the company’s information states.
At the same time, it is emphasized that the company seeks to maintain its human resources potential, therefore, all rotations and appointments to key positions are made by moving managers or combining roles, taking into account changes in the business configuration.
Zaporizhstal is one of the largest industrial enterprises in Ukraine, whose products are in great demand among consumers both in the domestic market and in many countries of the world. The plant specializes in high-quality hot-rolled steel coil, hot-rolled sheet, cold-rolled sheet, cold-rolled coil made of carbon and low-alloy steels, as well as steel strip, black tin, bent profile.
Zaporizhstal is in the process of integrating into the Metinvest group, the main shareholders of which are PJSC System Capital Management (71.24%) and the Smart Holding group of companies (23.76%).
Metinvest Holding LLC is the management company of the Metinvest group.
The international rating agency Fitch Ratings has affirmed the long-term issuer default rating (IDR) in foreign and national currencies and the senior unsecured rating of Metinvest Mining and Metallurgical Group at ‘ССС’, the recovery rating is ‘RR4’.
“Metinvest’s ratings reflect the company’s sufficient funding over the next six months, supported by cash flow generation from its international asset base, few significant short-term maturities and existing cash position. This also reflects increased operational risk for the company following the military invasion Russia to Ukraine, including the occupation or damage of some of its assets, as well as severe logistical restrictions,” Fitch explained in a press release on Tuesday.
At the same time, it is noted that about a third of the company’s EBITDA in 2022 will be generated by its international assets.
The ‘CCC’ rating reflects Metinvest’s increased operational and financial risks. Ferrexpo plc has a higher ‘CCC+’ rating due to its lack of financial debt. Metinvest’s business profile benefits from upstream assets outside of Ukraine, maintaining its rating above Interpipe Holdings plc (CCC-), whose assets are wholly concentrated in Ukraine,” the agency explains.
Analysts predict that Metinvest’s sales will be around 50% of 2022 levels, with a gradual recovery between 2023 and 2025.
In addition, experts suggest that Metinvest will be considered an operating company in the event of bankruptcy and will be reorganized, but not liquidated.
According to analysts, Metinvest has limited liquidity: the company keeps most of its cash in offshore zones. The company continues to generate significant cash flows from its coal assets in the US, as well as its steel mills in Europe, and its iron ore and steel assets in Ukraine. This has helped offset the outflow of working capital in recent months.
Metinvest has minor upcoming maturities in 2022: its next significant maturity is $176 million due in April 2023 in connection with the redemption of its bonds, according to a press release.
As Yury Ryzhenkov, general director of Metinvest, said, the company is servicing its credit obligations, including Eurobonds, and intends to continue doing so in the future.
“We have not declared force majeure on debt. Unlike many Ukrainian issuers, we continue to service our entire loan portfolio, including planned payments on Eurobonds. And I think that we should have enough strength to do this,” he said. he.
Metinvest is a vertically integrated group of mining and metallurgical enterprises. Its enterprises are located in Ukraine – in Donetsk, Lugansk, Zaporozhye and Dnepropetrovsk regions, in European countries. In particular, in Bulgaria there is a Promet Steel plant with a capacity of 500 thousand tons of rolled metal per year, in Italy – Metinvest Trametal and Ferriera Valsider with a total capacity of 1.2 million tons per year. In the UK, the company owns the Spartan UK plant, which can produce 200 thousand tons of rolled steel per year.
The main shareholders of the holding are the SKM group (71.24%) and Smart Holding (23.76%), which jointly manage it.
Metinvest Holding LLC is the management company of the Metinvest group.
According to the results of January-June this year, Metinvest reduced steel production by 45% compared to the same period last year, to 2.412 million tonnes, according to a press release from the parent company Metinvest B.V. on Wednesday.
According to the report, the production of pig iron decreased 49%, to 2.252 million tonnes, coke fell by 55%, to 1.075 million tonnes.
At the same time, in connection with the start of a large-scale military aggression of the Russian Federation against Ukraine, from February 24, 2022, Metinvest decided to halt the manufacturing activities of its assets in Mariupol, Avdiyivka and Zaporizhia. The group’s Zaporizhia enterprises resumed their production operations later.
The group’s facilities in Mariupol and Avdiyivka have been affected by hostilities.
In the second quarter, iron and steel production amounted to 424,000 tonnes and 450,000 tonnes, respectively, which is 77% lower than in the previous quarter. In general, in the first half of 2022, the production of iron and steel amounted to 2.252 million tonnes and 2.412 million tonnes, respectively, which is 49% and 45% lower than the same period last year. The lack of production from the Mariupol steelmakers since the end of February 2022 was partly compensated by production volumes at Kamet Steel.
In addition, in the second quarter of 2022, the production of merchant semi-finished products decreased by 52% compared to the previous quarter, to 249,000 tonnes, largely due to a slump in hot metal production. In the first half of 2022, the production of merchant semi-finished products decreased by 47%, to 771,000 tonnes. This was partly compensated by the output of merchant billets at Kamet Steel, the effect of which in H1 2022 was 444,000 tonnes.
In the second quarter of 2022, the production of finished products decreased by 72% compared to the previous quarter, to 414,000 tonnes. At the same time, the production of flat products decreased by 946,000 tonnes, to 167,000 tonnes, because of the lack of production from the Mariupol steelmakers since late February 2022 and the shutdown of the Italian re-rolling plants for a scheduled maintenance in May 2022 in the absence of stable slab supplies. Production of long products decreased by 81,000 tonnes to 247,000 tonnes because of a production decline at Kamet Steel, irregular deliveries of billets from Kamet Steel to Promet Steel in Q2 2022, and the lack of production at Azovstal since the end of February 2022.
In the first half of 2022, the production of finished products decreased 46% compared to the same period last year, to 1.884 million tonnes. At the same time, the production of flat products decreased 1.658 million tonnes, to 1.281 million tonnes, the production of long products increased by 125,000 tonnes, to 575,000 tonnes following the acquisition of re-rolling facilities by Kamet Steel, which fully compensated the lack of Azovstal’s volumes since the end of February 2022 and the lower output at Promet Steel given the aforementioned reasons.
The production of rail products fell by 2,000 tonnes to 10,000 tonnes, pipe products – by 62,000 tonnes to 18,000 tonnes.
The output of the group’s coke-making assets has been affected by the war in Ukraine. Thus, in the second quarter of 2022, coke production decreased 63% compared to the previous quarter, to 292,000 tonnes, and in the first half of 2022 it fell by 55% compared to the same period last year, to 1.075 million tonnes.
Metinvest B.V. (the Netherlands), the parent company of an international vertically integrated mining and metallurgical group of companies, continues to fulfill its debt obligations, including to bondholders, despite the war in Ukraine.
“At the moment, despite the war, Metinvest Group continues to fully service its debt portfolio, including issued bonds,” the company’s press service told Interfax-Ukraine in response to a corresponding request.
Earlier, the company’s information for bondholders, published on the EURONEXT exchange in Dublin on July 29 this year, provided details about the current situation in the company. In particular, they talked about the consequences for the group of the Russian military invasion of Ukraine, which adversely affected Metinvest’s business and its performance.
At the same time, it was noted that the group’s assets in Mariupol, including the production facilities of Azovstal and Illich steel mill suffered from the fighting, and the Russian armed forces temporarily occupied the city. Until the active phase of Russian military aggression ends and reliable communication channels with the metallurgical plants in Mariupol are restored, it is impossible to establish and assess the impact of military operations on them.
“However, given the ongoing occupation of Mariupol, the Board of Directors today designated Azovstal and Illich Iron and Steel Works as its unrestricted subsidiaries for each bond series,” the company’s notice states.
In addition, it is specified that after Azovstal and Illich steel mill were recognized as unrestricted subsidiaries, they are automatically and unconditionally released from their bond guarantees. At the same time, according to the terms of the bonds, the company is not obliged to contribute other subsidiaries as additional security for the bond guarantee, the notice emphasizes.
Metinvest, the largest Ukrainian mining and metallurgical holding, ranked 42nd in the list of the world’s top steel-producing companies in 2021 with a volume of 11.48 million tonnes compared to 45th place in 2020, when it produced 10.16 million tonnes.
According to the annual publicationfrom the World Steel Association (Worldsteel), China Baowu Group became the largest steel company at the end of last year with 119.95 million tonnes (in 2020 it was 115.29 million tonnes), ArcelorMittal with 79.26 million tonnes (in 2020 – 78.46 million tonnes) is in second place.
They are followed by Ansteel Group with 55.65 million tonnes, Nippon Steel with 49.46 million tonnes (41.58 million tonnes) and Shagang Group with 44.23 million tonnes (41.59 million tonnes).
There are no Ukrainian companies in the list of the 50 top steel-producing companies at the end of 2021, as well as at the end of 2014-2020, except for Metinvest.
Among Russian companies, NLMK was 21st with 17.29 million tonnes (at the end of 2020 it was in 22nd place with 15.75 million tonnes), Magnitogorsk Iron and Steel Works was 32nd with 13.59 million tonnes (37th with 11 .57 million tonnes), Evraz group was in 34th place with 13.57 million tonnes (30th place with 13.63 million tonnes), Severstal was 40th with 11.65 million tonnes (40th place with 11.31 million tonnes).
According to Worldsteel, Ukraine produced 21.4 million tonnes of steel in 2021 and was 14th among major steel-producing countries (in 2020 it was 12th place with 20.6 million tonnes), the volume of pig iron production amounted to 21.2 million tonnes (20. 4 million tonnes), while last year the country exported 3.2 million tonnes (3.1 million tonnes) of pig iron, the apparent consumption of pig iron in Ukraine amounted to 17.9 million tonnes (17.3 million tonnes). Apparent steel use in Ukraine in 2021 amounted to 4.8 million tonnes (4.6 million tonnes in 2020), while use per capita reached 110.3 kg (in 2020 it was 105.2 kg per capita).
On average, in the world in 2021, the apparent use of steel amounted to 232.8 kg per capita. (229 kg per capita), the best indicators are in South Korea 1075.6 kg per capita. (955 kg per capita), Taiwan 885.6 kgper capita (789 kg per capita), Czech Republic 775.5 kg per capita. (624.3 kg per capita), China 666.5 kg per capita. (699.2 kg per capita), Japan 456.2 kg per capita. (416.1 kg per capita) and Austria 516.9 kg per capita. (405.2 kg per capita).
At the end of 2021, Ukraine took 10th place in the world ranking of major exporters of steel, having sold 15.7 million tonnes of steel products on foreign markets (in 2020 it was in 9th place with 15.2 million tonnes), China ranked first 66.2 million tonnes (51.4 million tonnes), Japan was in 2nd place with 33.8 million tonnes.
At the same time, in the ranking of net exporters, Ukraine ranked fifth in the world with a volume of 14.4 million tonnes (in 2020 it was in the fourth place with 13.9 million tonnes), China was the first with 38.4 million tonnes (fifth place with 13.5 million tonnes), Japan was second with 28.3 million tonnes (second with 24.8 million tonnes).
The largest metal importers last year were EU (27) with 48.1 million tonnes, the United States with 29.7 million tonnes and China with 27.8 million tonnes.
In the ranking of net importers in 2021, the leaders are the EU (27) with 22 million tonnes, the United States with 21.4 million tonnes and Thailand with 13.7 million tonnes.
Metinvest, the largest Ukrainian mining and metallurgical holding, in January-March this year reduced steel production by 8% compared to the same period last year and by 25% compared to the previous quarter – to 1.962 million tonnes, according to a press release from the parent company Metinvest B.V.
According to the report, production of pig iron decreased by 15% and 31% respectively – to 1.828 million tonnes, coke – by 33% and 28% respectively, to 783,000 tonnes.
Metinvest added that in January-March this year, the group reduced the total production of iron ore concentrate by 3% compared to the same period last year and by 10% compared to the previous quarter, to 2.786 million tonnes.
The output of pellets amounted to UAH 1.281 million, which is 35% less than in Q1 2021, but 34% more than in the previous quarter, while the output of coking coal concentrate in the first quarter of this year increased by 29% compared to Q1 2021, but decreased by 14% from Q4 2021 – to 1.276 million tonnes.
Metinvest is a vertically integrated mining group of companies that manages assets in every link of the production chain from iron ore, coal mining and coke production to the production of semi-finished products and finished products from steel, pipes and coils, as well as production of other high value-added products. The group consists of mining and metallurgical enterprises located in Ukraine, Europe and the United States, has a sales network covering all key global markets.
Metinvest’s main shareholders are SCM Group (71.24%) and Smart-Holding (23.76%), which jointly manage the company.
Metinvest Holding LLC is the management company of Metinvest Group.
