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Ukraine rail transport suspension following invasion hits steelmakers, miners


Passenger rail transport prioritized for evacuation

Steel output set to fall at Metinvest, AM Kryvyi Rih

  • Author
  • Katya Bouckley    Hector Forster    Annalisa Villa
  • Editor
  • Diana Kinch
  • Commodity
  • Coal Metals
  • Topic
  • War in Ukraine

Ukraine's railway operator Ukrzaliznytsia's suspension Feb. 24 of some railway transport services following Russia's invasion of Ukraine has impacted some of the country's major steelmakers and iron ore miners, industry sources reported.

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Production is reportedly impacted at steelmakers and iron ore miners Metinvest and ArcelorMittal Kryvyi Rih, while iron ore miner and pelletizer Ferrexpo said its facilities continue to operate.

According to an official statement, Ukrzaliznytsia's railway capacity is needed as a priority for evacuating citizens from a number of towns and regions.

Ukrzaliznytsia informed that for the safety of citizens, it has temporarily stopped the movement of trains to Kharkiv, changed the movement of individual trains and is ready to evacuate city residents near the demarcation line.

Factbox: Crude prices climb as Russia 'invades' Ukraine

As of 10:00 on Feb. 24, most passenger trains, all trains to Kyiv and the capital, as well as western trains run on schedule, it reported. Eastern trains continue to run at a safe speed, with slowdowns and stops possible for safety reasons near sheltered stations, it said.

A Metinvest source cited rail blockages as paralyzing its raw materials procurement and steel trade. The source said the group will continue to operate its steel and coke plants, on extended coking times, to keep them hot and given low steel demand, but that steel output will fall drastically. The group plans to take already purchased seaborne coking coal cargoes for now to keep coke plants running, according to the source.

Metinvest, which accounted for 45% of Ukraine's crude steel output in 2021, or 9.5 million mt, said Feb. 23, before the invasion, that it had a contingency plan in place to cover any potential disruption to operations, with priority to be given to the safety of its personnel working in vulnerable sites.

Metinvest's Ilyich and Azovsteel iron and steel works, and its Avdeevka coke plant, are all located close to the disputed Donetsk and Luhansk regions in eastern Ukraine.

Ferrexpo, the world's third largest exporter of high grade iron ore pellets to the global steel industry, confirmed that the government of Ukraine has suspended rail transportation. "The Group is continuing to assess developments locally and will prioritise the safety of its workforce. At the present time, the Group's mining and processing facilities are operating, which are located adjacent to the city of Horishni Plavni, in central Ukraine, where the situation remains stable," it said in an operational update.

AM to stop underground mining

ArcelorMittal Kryvyi Rih, Ukraine's largest integrated steel company located in Kryvyi Rih city, "is working to slow down production to a technical minimum" and production will be stopped at its underground mines, according to a statement issued by ArcelorMittal from London.

A source noted that the underground mines account for around 10% of the company's Ukrainian mining operations, and that all open pit mining continues for now.

"We all hope for a swift resolution," the ArcelorMittal statement said. The steelmaker "is deeply concerned about the developments in Ukraine and the potential impact this will have on our colleagues in the country. Our priority is our people and we had developed plans to help them stay safe should the situation escalate in this way," it said.

ArcelorMittal Kryvyi Rih produces about 20% of the national steel output. In Ukraine it is also the largest steel manufacturer of both rebar and wire rod and also produces sections, angles, strips and billets. The steel plant produces over 6 million mt of crude steel a year, 5 million mt of rolled products and 5.5 million mt of hot metal. The company's iron ore mines typically produce 24.5 million mt/year.