'If nothing is done, it's almost inevitable': Ukraine's Yuriy Ryzhenkov on why steelmaking is on the brink of collapse as Russian bombing intensifies

Yuriy Ryzhenkov represents a unique figure in the business world, serving as the chief executive of Metinvest, Ukraine's largest steel producer, amidst the ongoing conflict that has persisted for over four years. Leading a workforce of 33,700, Ryzhenkov is acutely aware that more than 8,000 of his employees are engaged in active combat against Russian forces. The relentless bombardment has not only targeted factories but has also resulted in the tragic loss of hundreds of colleagues.

As the war rages on, Ryzhenkov observes that the current phase is proving to be one of the most challenging periods for the company since the onset of Russia's full-scale invasion.

"The blockade of the seaports has intensified beyond what we faced in 2022," Ryzhenkov, who assumed the CEO role in 2013, articulates. "Our facilities have suffered numerous attacks over the past four and a half years. While we strive to restore operations after each strike, the reality is that each incident degrades our capacity."

"In a wartime environment, restoring operations to their original state is not a viable option. Instead, we must focus on the best possible solutions to maintain functionality, though these solutions inevitably fall short of ideal standards. Unfortunately, August and September of this year witnessed some of the most severe bombing campaigns we have experienced, forcing us to halt operations at both of our steel mills."

Ryzhenkov shares that this led to the loss of 14 lives at the mills, marking one of the most significant casualties since 2023 during a single bombing event.

The EU Tariff Challenge

However, the threats to Ukraine's steelmaking sector extend beyond Russian aggression; they also stem from regulatory changes within the European Union. In July, the EU imposed new tariffs on all steel imports aimed at shielding its domestic industry from lower-priced foreign goods. Key tariff rate quotas for Ukraine were slashed by 60%, projecting a reduction of approximately 1.3 million metric tons in steel imports from Ukraine to the EU annually, as reported by the GMK Center, a Ukrainian think tank.

"When comparing this year's quotas to those allocated last year, we observe a stark 60% decline. This occurred even while our ports remained closed, and we have virtually no alternative market," Ryzhenkov notes.

"Following the invasion, the EU acknowledged that our only feasible market would be within the EU itself due to the port blockades. Initially, they lifted restrictions on steel exports to Europe, which, in my opinion, was an appropriate response."

"Yet, suddenly, in the first half of this year, we encountered quotas that lumped us together with other non-EU nations. The unique circumstances surrounding our logistical and energy challenges, as well as personnel shortages, were not considered adequately in this approach. I find it excessively harsh given our situation."

The Precipitous Decline

Ongoing discussions with EU representatives indicate that they recognize Ukraine's specific context. Nevertheless, the convergence of armed conflict from one direction and trade barriers from the other places the steelmaking industry in Ukraine in an extremely vulnerable position. Data reveals that steel production in the country plummeted from 21 million metric tons in 2021 to just 7.4 million metric tons by 2025. This decline also corresponded with a drop in exports from $22 billion to $6 billion and a significant reduction in tax revenues from $3.5 billion to $870 million. The continuous assaults on factories, energy infrastructures, and transportation networks by Russian forces further diminish steel supply necessary for the Ukrainian armed forces.

"There is essentially no viable future without a market for our products," Ryzhenkov emphasizes. "With persistent disruptions, maintaining a cost-effective steel business is exceedingly challenging. This sector typically requires at least 90% capacity utilization for profitability, even in stable conditions, and developing long-term market commitments is currently unattainable."

The End of Steelmaking in Ukraine?

The conversation inevitably leads to the question: Could this signify the end of steelmaking in Ukraine?

"Unfortunately, if no action is taken, that outcome becomes increasingly likely," Ryzhenkov responds. "If Ukraine is barred from full participation in the European market, coupled with prevailing conditions that hinder substantial investments, we will ultimately face an end."

Coming from a family legacy rooted in steel production—his grandmother held a role as a chemical engineer in a coal plant related to steelmaking, while several family members also dedicated their careers to the industry—Ryzhenkov possesses a deep-seated determination to persist despite the losses and omnipresent threats of further attacks.

"Frankly, we find ourselves with limited options, right?" he reflects. "Of course, one could choose to abandon the endeavor entirely, but we are responsible for over 35,000 employees and their families. With 8,500 of our staff serving in the armed forces who depend on us, it raises the question: why walk away when we still possess the ability to strive for continuity? For myself, I simply do not see a valid reason to do so."