Occupation of Pokrovsk mines will seriously affect steel production in Ukraine – Reuters

Russian troops are approaching the town of Pokrovsk in Ukraine’s Donetsk Oblast, threatening the production of coking coal needed by the Ukrainian steel industry.

Source: Reuters  

Details: The mine, located about 10 kilometres west of Pokrovsk, is Ukraine's only source of coal used to make coke, a key component in steelmaking. Metallurgy is Ukraine's second-most important foreign exchange earner after agriculture.

Oleksandr Kalenkov, the chairman of the Ukrainian steelmakers’ association, noted that the loss of the Pokrovsk mine could lead to a significant reduction in steel production.

Kalenkov said that production was expected to reach 7.5 million tonnes of steel in 2024 and 10 million in 2025, but if Pokrovsk is lost, this figure could fall to 2-3 million tonnes, a 50% and 70% decrease accordingly.

The problem is exacerbated by the difficulty of importing coal due to military risks and the fact that Ukrainian ports are more suited to exports than imports. At the same time, Kalenkov said coal imports would increase production costs, making Ukrainian steel less competitive.

Alternative sources of coal could come from the US and African countries, including South Africa. Some companies, such as ArcelorMittal Kryvyi Rih, are already stockpiling coal in case of supply disruptions.

A steel industry source said that if the Pokrovsk mines are seized, manufacturers hope to find alternative sources of coking coal elsewhere in Ukraine, but imports will undoubtedly be necessary. As Kalenkov said before, this will increase production costs, making Ukrainian steel less competitive.

Background: Business associations have called on the government of Ukraine to develop and approve an appropriate mechanism for economic reservation from mobilisation amid the mobilisation of their employees.

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