How anti-Russian sanctions, destruction of Azovstal affect Metinvest’s European expansion plans

17 September, 05:52 PM
The condition of 3,600 Azovstal metallurgical plant after the bombing by the Russian army (Photo:@Kozatsky_D via Twitter)

The condition of 3,600 Azovstal metallurgical plant after the bombing by the Russian army (Photo:@Kozatsky_D via Twitter)

The Metinvest Group, Ukraine’s largest mining and metallurgical holding, is considering building a new plant in the EU. There is a shortage of flat-rolled steel products after the destruction of the Azovstal and Illich Iron and Steel Works in Mariupol, and sanctions against Russian plants have hampered imports into Europe. What kind of enterprise will it be?

After Mariupol was occupied by Russian troops, the Metinvest Group, owned by oligarchs Rinat Akhmetov and Vadim Novinsky, changed its plans to build a new plant in the European Union.

"Initially, we had the idea of rolling production," said Yuriy Ryzhenkov, CEO of Metinvest Group, in an interview with NV Business.

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“But it was based on the availability of Azovstal slabs. We will not see these slabs in the near future. Therefore, we started looking at another vector based on DRI raw materials and electric arc furnace production.”

The Metinvest CEO  says that a new plant in the EU could process iron ore from the Group's Ukrainian enterprises and facilitate the sales of Ukrainian products for export.

Regarding the need for another steel plant in the EU, Ryzhenkov believes that steel is a strategic product and every region of the world is trying to be self-sufficient in steel.

"The EU has no excess capacity, it is a net importer," the Metinvest CEO noted.

He explained that currently, Azovstal and the Illich Iron and Steel Works have left the EU market, so Europe is facing large problems in sourcing with flat-rolled steel products. Prior Ukrainian and Russian imports cannot be quickly replaced.

"At the same time, there are talks about a new package of sanctions,” Ryzhenkov said.

“It is very likely that the way for Russian semi-finished products to Europe will be closed. This will create an even greater deficit.”

All this provides an opportunity to create new steelmaking capacities in the EU using new "green" technologies.

He believes that the European Commission will decide to close the market for Russian semi-finished materials (primarily slabs from NLMK – NV Business), because this count as direct financing of the aggressor's economy, and partially anti-competitive actions against those who cannot buy Russian raw materials.

Despite the loss of plants in Mariupol, Metinvest has managed to find raw materials for its European plants in the United Kingdom, Italy, and Bulgaria.

In addition, the company is looking for opportunities to develop cooperation between its Ukrainian assets. For example, Zaporizhstal (Zaporizhzhia) has started producing slabs from ingots made by Kametstal (Kamyanske), which has a more modern steelmaking process. These slabs are then processed at European branches.

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