Metinvest liquidates its companies in Russia, Belarus, may build plant in EU, improves quality of pellets at Pivnichny Mining – CEO

KYIV. Sept 16 (Interfax-Ukraine) – Mining and metallurgical group Metinvest after the start of the full-scale war in Russia in Ukraine decided to liquidate its divisions in the Russian Federation and Belarus, due to the destruction of the Illych Iron and Steel Works and Azovstal in Mariupol, it is considering the construction of a plant in the EU and is engaged in improving the quality of products in accordance with market demands.

"After February 24, a decision was made to liquidate them [companies in the Russian Federation and Belarus]. We only have marketing assets there: Metinvest Eurasia and the Belarusian Metinvest Distribution. There are operating teams that have been given liquidation instructions," Yuriy Ryzhenkov, CEO of the company, said in an interview with NV Business.

According to him, top managers, managers, specialists who were citizens of Belarus or the Russian Federation worked in the group. Many of them have been with the company for over 10 years. After February 24, most of them were either fired or quit themselves. Now there are only a few left – mostly those who condemn what is happening. Someone received another citizenship.

Regarding the situation with the destroyed Illych Iron and Steel Works and Azovstal, it is currently difficult to assess the extent of the damage – this will be done after the de-occupation, and then it will be decided on the possibility of restoring assets or building new ones as part of the production of green steel. Both general directors of these Mariupol enterprises work for the company, both in Ukraine. Thus, Taras Shevchenko, General Director of Illych Iron and Steel Works, is in Zaporizhia and will soon start a new job. Azovstal CEO Enver Tskitishvili is now advising the holding’s operations management and helping to build staff training methods.

In general, 35,000 people worked in Metinvest’s structures in Mariupol. Of these, about half got in touch with the company, most went to the territory controlled by Ukraine. More than one thousand people have been employed by the group’s enterprises, another 2,000 are undergoing retraining – they are expected to join teams in Zaporizhia, Kamianske and Kryvy Rih.

Asked about relations with the second large group of shareholders of Zaporizhstal, which is associated with Russia, Ryzhenkov said that there have been no relations with it for a long time, only within the framework of shareholders’ meetings. The necessary decisions are made with the support of minority shareholders. At the same time, Metinvest does not see the risks of a possible seizure of shares of the second group of shareholders by the Bureau of Economic Security (BES).

"Such decisions and commenting on them are exclusively the prerogative of the state. We do not see any risks or opportunities in this yet. Although Zaporizhstal is an enterprise that requires a serious investment program. And some of its shareholders were not ready to invest. Therefore, some decisions states can provide an opportunity for the development of the plant," the CEO said.

The head of the company also said that to intensify the operation of enterprises, including mining and processing plants, there are a number of areas in which the group is working. First of all, the unblocking of ports: if they find a way to unblock ports for mining and metallurgy products, this will give a good result in loading the enterprises. But this is rather a geopolitical and state issue, which both the president and the Ministry of Infrastructure are actively involved in, Ryzhenkov added.

Another direction is the construction of a new plant in the EU, which could process our iron ore and become an opportunity to sell Ukrainian products for export.

"At the same time, we are looking at projects that could be done at Zaporizhstal and Kamet steel. This can also help expand bottlenecks, especially in the production of high-quality rolled products. And this will allow loading the enterprises. We tried to produce high quality blast furnace pellet in August. It is even possible to bring it to the level of DRI-pellet [pellets for direct reduction of iron technology], which was previously produced only at Central Mining," the head of the company said.

However, serious investments can be made after the end of the war with real security guarantees for Ukraine, the CEO said.

Ryzhenkov also said that after the loss of Azovstal and Illych Iron and Steel Works, the group did not buy slabs in the Russian Federation for its rolling facilities in Italy and the UK.

"We have several sources. We bought in Southeast Asia, looked at Brazilian slabs. We buy a European slab. For example, Acciaierie di Italia Holding in Taranto (former ILVA). We are negotiating with U.S. Steel in Kosice, with Liberty. We are looking for small lots of slabs. In addition, we are mastering the production of slabs at Zaporizhstal. This is a rolled slab, but we already have the first successes. Moreover, we have intra-corporate synergy. We produce an ingot from converter steel at Kamet steel, after which we roll its slab at Zaporizhstal. The slab goes to European assets and is rolled into sheets," the general director said.

Concerning the issue of coke supply after the shutdown of the Avdiyivka Coke Plant, the top manager said that the group has three coke plants where coke can be produced: two in Kamianske and Zaporizhia Coke Plant, which is technologically connected with Zaporizhstal.

"There are two more coke plants where we supply our coal for processing, let’s call it that, and take the coke. These are ArcelorMittal in Kryvy Rih and the former Petrovsky Steel Works in Dnipro. With the current loading of metallurgy, we have enough of these capacities. If we raise production, then we will have to look for additional coke," Ryzhenkov said.