Rebuilding Ukraine steel capacity hinges on security guarantees, Metinvest CEO says

Reuters

10-03-2025

KYIV, March 10 (Reuters) - The head of Ukrainian steel giant Metinvest told Reuters that rebuilding its heavily war-damaged operations will hinge on the robustness of U.S. and European security guarantees in any ceasefire deal with Russia.
Yuriy Ryzhenkov, Metinvest's chief executive, said the company planned to keep its production close to 2024 levels and push ahead with projects to increase its energy independence.
But its bigger plans, including the repair of some of the huge blast furnaces vital to the Ukraine's steel sector, will have to wait.
"We need to see what sort of conditions will be agreed to for a ceasefire or peace deal, and what sort of guarantees will be provided so that business can start investing again," Ryzhenkov said in an interview.
"Nobody knows what's going to be on the table at the end. And more importantly, we still don't understand what will be the guarantees that it (the war) won't restart."
More than three years into the conflict and Metinvest, like many other Ukrainian businesses, has learnt to adopt to the wartime challenges - from attacks on its facilities to disrupted logistics and labour shortages.
But the current situation looks increasingly precarious.
Since last month, U.S. President Donald Trump has engaged directly with Russia and suspended military support to Kyiv, in a stated pursuit of rapidly ending the fighting.
Despite having some of Ukraine's biggest coal mines, Metinvest isn't part of the 'rare earths' deal Kyiv is hoping to strike with the Trump administration. Ryzhenkov said it should be good for the country and the case for U.S. security backing.
"For them (U.S. firms) to invest, they also would have to have some sort of security guarantees. So it will go hand-in-hand in my view," he added.
RISK PERCEPTION
Metinvest was forced to close Ukraine's only coking coal mine in January as the frontline in the war moved too within roughly two kilometres of the mine.
It already lost a number of key assets earlier in the conflict - most notably its giant Azovstal and Illich steel plants in Mariupol and a coking coal mine in Avdiivka.
"We were investing billions in Mariupol and were prepared to invest even more," Ryzhenkov said explaining the money was spent on the premise that the 2014-15 Minsk agreements, struck after the annexation of Crimea the separatist war by Russian-speakers in Ukraine's eastern Donbass region, would to prevent another Russian invasion.
"But then it all got destroyed in a matter of a few months," Ryzhenkov lamented. "None of the agreements were obeyed."
That means security guarantees now need to robust otherwise investors are unlikely to lend Metinvest the money it needs to rebuild.
"Obviously we will have to look at how the market perceives the situation, ... the traditional lenders, whether they would be ready to lend against Ukrainian risk."
PRODUCTION HOPES
For the time being, it hopes to keep its production at around 2024 levels.
Metinvest produced around 14 million tonnes of steel before Russia's 2022 full-scale invasion when the iron and steel sector contributed around 10% of Ukraine's GDP.
Last year its steel production was 2.1 million tonnes, up by 4% compared to 2023. Pig iron production rose by 3% year-on-year to 1.82 million tons in 2024.
"We will try to have an improvement on the steel production, iron ore production. But that improvement is going to be within like 3-5% improvement done last year. We don't expect anything more until the peace is restored," Ryzhenkov said.
It still investing in solar panels and gas fired power generation to strengthen its energy independence.
Its project to develop green steel production in Italy is also likely to take another step forward in the coming weeks, Ryzhenkov said, adding that it was also looking a number of small M&A opportunities in Central and Eastern Europe.
It hopes to avoid the need for another debt restructuring too.
"At the moment, we don't have any significant immediate debt repayments coming up, so we don't really feel we need one," Ryzhenkov explained. "Obviously, it will depend how the situation will unfold in the next few months.
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