Metallurgical industry to recover only after ports unblocked – Metinvest commercial director

The metallurgical industry will recover only after the ports are unblocked – the opening of sea ports not only for grain, but also for steel exports, could bring Ukraine up to $600 million in foreign currency proceeds every month, according to the Metinvest mining and metallurgical group.

The commercial director of Metinvest, Dmytro Nikolayenko, said in a column for Forbes, that in fact, the plants are also operating at less than one third of total capacity on Ukrainian-controlled territory. In particular, in December 2022, the Kamet Steel and Zaporizhstal mills were operating at 25% and 33% of their pre-war levels respectively.

One of the main reasons for this drop in production can be found in issues with sales due to blocked seaborne exports. Before the full-scale war, steelmakers were shipping 80% of Ukraine's steel to foreign countries. Some 70% of Ukraine's steel products used to be exported through seaports, but with the outbreak of full-scale war they remain blocked to most exporters, except those from the agricultural sector.

"Of course, steelmakers are looking for alternative ways to ship their products abroad and use railway and river port capacity. However, due to a significant increase in railroad tariffs (up to 140% for ore, coal and coke, and up to 70%for ferrous metals) and additional costs for the delivery of products to EU ports, the cost of logistics has grown by four to six-fold," Nikolayenko said.

He added that as a result, in 2022, Ukraine's revenues from the exports of ferrous metals decreased 67.5% compared to 2021, to $4.533 billion. However, under current conditions, even this result is a great achievement.

As Nikolayenko said, it is worth noting that the mining and metals industry is one of the leading sectors of the economy.

On the eve of the war, in 2021, the mining and metals sector accounted for 33% of Ukraine's total exports, worth $22 billion, with the industry accounting for 10% of GDP. Accordingly, the drop in the metallurgical production and exports is leading to a significant loss, with the country's GDP in 2022 falling by almost a third.

"However, the good news is that the metallurgical industry has the potential to recover quickly if, in addition to the existing grain export corridor, it succeeds in opening the ports for the export of mining and metals goods. This will strengthen the economic power of the state, as it will generate around $600 million in export revenues per month and save hundreds of thousands of jobs," the top manager said.

Therefore, Metinvest Group, on behalf of the entire industry, calls on the authorities, diplomats and international partners of Ukraine to make every effort to open the sea to Ukrainian steel, which to the world has already become a symbol of Ukrainian resilience and the country's unbreakable spirit, the commercial director of the holding said.

Metinvest is a vertically integrated group of mining and metallurgical enterprises. Its enterprises are located in Ukraine – in Donetsk, Luhansk, Zaporizhia and Dnipropetrovsk regions, as well as in European countries.

The main shareholders of the holding are the SCM group (71.24%) and Smart Holding (23.76%), which jointly manage it.

Source: www.en.interfax.com.ua