The mining and metallurgy group "Metinvest" has identified several key challenges for 2025, including the lack of dialogue with state monopolies regarding tariff increases, the risk of losing Pokrovsk, a shortage of personnel, and a complex economic situation caused by the war and destruction of infrastructure.
As reported by the head of the CEO office of the group, Alexander Vodoviz, at the conference "Ukraine and the World Ahead," organized by NV with the support of The Economist, "Metinvest" has already faced a significant rise in operational costs and a decrease in competitiveness, which has led to the shutdown of the Ingulsky Mining and Processing Plant (InGOK).
Therefore, the current strategy of the group is focused on maintaining the workforce and supporting ongoing operations, as any further increase in tariffs would only weaken the business's position.
"Today, we have halted InGOK - that’s 4,000 people out of work, whom we are trying to employ at other assets. Two reasons for the asset's shutdown are high electricity transmission tariffs and railway transportation rates. Our production costs do not reach our core markets. And now we see that "Ukrzaliznytsia" wants to raise tariffs again by 37%. They propose nearly a fourfold increase in gas transportation tariffs, and the electricity transmission tariff has already risen by 30%. In such conditions, thinking about future development is very challenging. We have switched to survival mode and are trying to preserve what we have," he said.
The top manager added that regulatory bodies and state companies need to establish a dialogue with businesses regarding tariff policies. After all, businesses are the main consumers of these companies' services, and their decisions will impact enterprise operations and the indicators of the Ukrainian economy.
"Yes, 'UZ' incurs its expenses, has done a lot, and helped with evacuation. But we also need to look ahead. 'UZ' has been profitable for the last two years, while we are facing losses. They have about 6 billion in cash for 2024, and we have no cash. They are unwilling to restructure their obligations, while private businesses need to do this for bonds, etc. Most importantly, we currently have no discussion with state monopolies - neither with the NKREKP nor with 'UZ', that’s the problem," he noted.
Regarding the situation at the enterprises in Pokrovsk - "Metinvest Pokrovskugol" (which includes the "Pokrovskoye" mine management and the "Svyato-Varvarinskaya" processing plant), Vodoviz emphasized that it is the only producer of coking coal in Ukraine, supplying raw materials to the company's plants and the entire remaining metallurgy in the country. Due to the proximity of the front line to the city, a third of the mine is already non-operational.
"If the Pokrovsk mine is occupied, we will need to transport coal by sea. It is economically unfeasible to produce steel if coal is delivered by sea. Therefore, a significant question arises for us and our metallurgical colleagues: what will we do if Pokrovsk, say, falls? We understand that the mine plays a key role in Ukraine's economy. And the Russians understand this," he stated.
The head of the CEO office of "Metinvest" added that the company is trying to relocate mine workers to a safer part of the Dnipropetrovsk region, where they are building temporary housing for them; however, not everyone wants to leave.
Overall, "Metinvest" holds a pessimistic view regarding the economic situation in the country and the results of its operations in the coming year. This is caused by a number of factors, particularly the ongoing hostilities and their proximity to populated areas where the company's assets are located. The destruction of infrastructure due to Russian attacks also has a significant impact. The situation in the country, especially in the financial sector, remains dependent on the stance of Western partners. A significant staff shortage and rising costs, particularly due to tariff increases, add to the challenges.
"The situation is worsening for us. The infrastructure captured by the Russians in the east is destroyed and bombed out. Enormous funds are needed to restore it, so we won’t be able to do this in a short period to generate additional GDP for our country," Vodoviz explained.
According to him, competition for workers is intensifying due to the significant number of Ukrainian migrants abroad and mobilization within the country.
"It has become clear that we will have to compete for labor with those who have left us, against the Poles, Hungarians, and Germans," the top manager suggested.
Moreover, not all demobilized workers wish to return to their jobs. Currently, for every five vacancies, the company receives an average of one response from a potential worker.
"About 10,000 people in 'Metinvest' have gone through the army. Around two thousand have returned. Unfortunately, we do not see a significant trend of people returning from the front lines to jobs. We are working hard on this, allocating funds to socialize people, and assisting their families," Vodoviz added.
"Metinvest" is a vertically integrated group of mining and metallurgical enterprises. Its facilities are located in Ukraine - in Donetsk, Luhansk, Zaporizhia, and Dnipropetrovsk regions, as well as in European Union countries, the United Kingdom, and the USA.
The main shareholders of the holding are the "SCM" group (71.24%) and "Smart Holding" (23.76%), which jointly manage it. LLC "Metinvest Holding" is the managing company of the "Metinvest" group.