Italy has offered Metinvest, owned by Rinat Akhmetov, the opportunity to rebuild a steel plant in Taranto.

01/04/2024

The Metinvest mining and metallurgical group intends to build a plant in Piombino in the Italian region of Tuscany as one of the most technologically and environmentally advanced of its kind, which will become a pilot for our future investments of the company in Ukraine, Metinvest CEO Yuriy Ryzhenkov said in an interview with La Repubblica, one of Italy’s largest newspapers. According to him, the new plant in Piombino will produce “green steel.”

The CEO said during a war the company devotes its greatest efforts to support the country on its path to victory. “For our Group, this means continuing to pay taxes, providing humanitarian aid and helping the Ukrainian army. Despite the loss of two steel mills, as well as the coking plant in Avdiivka, Metinvest remains the largest employer in Ukraine and the largest donor to the Ukrainian army. We have allocated significant funds to support the Ukrainian armed forces and provide humanitarian aid to Ukrainians,” the CEO said.

Answering a question about the financial results for 2023, the company’s CEO said the net loss was $118 million, “but we have stabilised the business while cash flow is positive, which means we are back on the right track. And this is very important.”

Regarding plans to build a plant in Piombino, Ryzhenkov said the group currently already owns two plants in Italy but intends to construct a third plant.

“Metinvest committed to build a new green steel plant in Piombino as part of a programme agreement with the Italian Minister of Enterprises and Made in Italy. This is the result of the cooperation of many institutions, including regional and municipal ones. We hope to finalise the agreement within the next three to four months and to have a precise action plan,” the CEO said.

“If we finalise the programme agreement by the middle of this year, we could start the plant’s construction towards the end of 2024. The construction itself will take two to three years. In an ideal scenario, we should start production in Piombino in 2027,” Ryzhenkov said.

He said Italy imports about 6 million tonnes of steel products. And thanks to the production that the company plans to launch, this deficit can be significantly reduced. The plant will become a pilot project for future company investments in Ukraine when the country begins to recover.

Ryzhenkov also explained plans to build a plant in Italy were made long before the invasion. Then the idea was to use semi-finished products from Azovstal for further processing in Italy. Now there is no Azovstal, but in Ukraine we have iron ore enterprises producing high-quality iron ore, which can be used to make DRI/HBI (direct reduced iron). So now the idea is to build a plant that will use iron ore from Ukraine to produce steel in Italy.

Responding to a question about the concerns of Italian manufacturers about a possible shortage of scrap due to the future construction of the plant in Piombino, the company’s CEO said in Italy there is no shortage of raw materials, there is competition, like in other countries. Raw materials can also be delivered by sea. And he emphasized that the steel plant in Piombino will receive raw materials from Ukraine.

“At the moment, we are identifying a location for the construction of the DRI plant, and we know that we are not the only ones, other Italian steelmakers are doing the same. Some are considering building DRI plants outside of Italy, where gas prices are lower. In any case, Metinvest will contribute to this process by supplying raw materials to DRI plants to be built in Italy, just as we will supply them to our DRI plant, which may be built in Ukraine or somewhere else, from which raw materials will be supplied to the Piombino plant,” the CEO said.

Touching on the topic of some Italian manufacturers purchasing cheaper Russian slabs, he pointed out that the holding in Italy produces coils as finished products, buys about 1 million tonnes of semi-finished products for the production of coils, but not a single ton is supplied from Russia.

“We buy slabs both in Italy, from Adi in Taranto, and from other European producers such as ThyssenKrupp, Galati or U.S. Steel in Košice. And on the wider market, also in China and Brazil. And it all remains profitable,” Ryzhenkov said.

He called on Italian manufacturers not to buy metal from Russia, since “it’s like shooting yourself in the foot.”

Answering a question about Metinvest’s alleged intention to acquire the assets of the former Ilva company, Ryzhenkov said Italian Minister Urso asked the company to pay attention to the plant in Taranto and consider the possibility of restoring it.

“We have set up a dedicated task force to analyse the situation and scenarios. We are providing our support by supplying raw materials to Taranto. In addition, we are supplying technical specialists to help optimise the use of our raw materials and purchase semi-finished products from Taranto. With this in mind, we are currently focusing on Piombino. But we are continuing to analyse ways in which Metinvest can do more to help the plant in Taranto, even if there are no announcements about this for the time being,” Ryzhenkov said.

According to him, if by the end of the year the Italian government puts the former Ilva sites up for auction, then Metinvest’s participation will primarily depend on the results of due diligence, after which it will consider the terms of the tender, its restrictions and the level of government support.

“In general, there are many things to verify before a group like Metinvest can say whether it is interested in an investment of this scale. At the moment, I can only confirm that we are analysing the situation, we can make proposals, but it is up to the government, as it is the one that has to create the conditions for taking further steps. We also know that some other groups in the industry are looking at the former Ilva plant, so we will see what happens next,” the CEO said.

Metinvest consists of mining and metallurgical enterprises located in Ukraine, Europe and the United States. Its main shareholders are the SCM group (71.24%) and Smart Holding (23.76%), which jointly manage it.

Metinvest Holding LLC is the management company of the Metinvest group.

Source and Credit: en.interfax.com.ua