Metinvest to declare force majeure on some contracts after Zaporizhstal, Kamet Steel halted by shelling – COO
Mining and steel group Metinvest will declare force majeure on some contracts after its Zaporizhstal and Kamet Steel plants were forced to halt operations due to shelling by occupying forces, Metinvest Chief Operating Officer Oleksandr Myronenko told Forbes Ukraine.
He said 2026 is one of the worst years for Metinvest, citing the EU's introduction of quotas on steel product supplies and the CBAM environmental levy, among other factors. In addition, Russia has blocked Ukrainian ports, and in August-September it shelled Kamet Steel and Zaporizhstal, forcing both plants to halt operations. The Central and Northern mining and processing plants (GZKs) are operating at 50% capacity, while the Southern GZK (a joint venture with partners) is idle due to the closure of Ukrainian ports.
The Inhulets GZK has been shut since 2024, as high electricity prices make production there inefficient. The asset has been properly mothballed and could resume production if market conditions improve — iron ore currently costs about $100 per tonne, whereas it would need to reach at least $135-150 per tonne of iron ore concentrate to make production viable.
"We're not seeing prices like that yet, and no forecast points to a sustained positive market, so we're forced to keep this asset in mothballs," Myronenko explained.
On restoring the steel plants, he said Kamet Steel and Zaporizhstal are currently in the process of recovery and clearing debris following the strikes carried out against these assets in August and September. Zaporizhstal has a total workforce of 8,500, and Kamet Steel about 8,000; they work in shifts, with 2,500-3,000 people on site at the plants at any given time.
Regarding the cost of restoring Zaporizhstal, fully restoring the damaged assets would run into the tens of millions, he said, noting that the plant's production chain has effectively been broken. He declined to give a timeline for restoration, saying people and project teams are working on it, and that timelines will be set once there's clarity on how long restoration will take and what equipment is needed.
"On some contracts, we're declaring force majeure, because it genuinely is force majeure. We're then talking with our counterparties about postponing contract deadlines or canceling them. These are multimillion-dollar contracts. I'm trying to assess the losses to the company," the chief operating officer said.
He also stressed the need to lift the port blockade, calling it the main problem, since without open ports even restored assets won't be able to operate at full capacity.
"Our Southern GZK has stopped — that's up to 1 million tonnes a month of ore that was going for export. The Northern and Central GZKs were exporting roughly another 0.5 million tonnes via ports. That's 1.5 million tonnes a month that's fallen out of exports because of the ports. And add steel products on top of that," Myronenko said.
He also said that after operations in Pokrovsk were halted, the company had to import about 250,000 tonnes of coal a month. Some grades come by rail from the Czech Republic and Poland, but the lion's share used to come through Ukrainian ports: vessels would unload at the ports of "Greater Odesa" and then load, for example, iron ore concentrate for export. All of that is now stopped.
Metinvest has shifted all of its coke plants to maximum coking periods. Everything that can be brought in by rail or through Polish ports or Constanta is being brought in, but this raises the cost of coal logistics by 50-60%. He noted that due to the port blockade, the EU market is currently the only one the company can export to; other markets are closed off due to expensive logistics. Occasionally, when conditions allow, pig iron is shipped via Poland to the United States.
Since April, the EU has imposed quotas on steel industry products, allowing exports of half of last year's volume, or 1 million tonnes. The quotas apply to finished products with higher added value — coil, rebar, wire rod — while semi-finished products such as billets are not quota-restricted.
"In 2022-2023, the company had a safety margin built up in the pre-war years. Today that margin is gone — not just for us, for any company. Without state support, without help from foreign partners, we simply won't stay afloat. There's the fact of closed ports, the fact of rising tariffs, the fact of massive shelling of enterprises. And this isn't just Metinvest's plants — it has hit almost every mid-size-to-large producer in Ukraine," Myronenko said.
He added that while there are funds providing some financing for post-strike recovery in the energy sector, no such funds exist at all for metallurgy or other industries, and no one is even discussing them. Such funds should exist, he said, because metallurgy is a major export-oriented industry that has always reliably paid its taxes.
According to the top manager, if ports aren't working, domestic transport logistics costs shouldn't be raised. Ukrzaliznytsia is effectively shooting itself in the foot: the more it raises tariffs, the less efficient it becomes. There's another problem at Ukrzaliznytsia that few discuss, he said: there's no systemic solution for supplying locomotives to sustain stable freight transport within 150 km of the front line.
Trying to preserve its rolling stock, the rail operator moves it further away from key industrial regions such as Dnipro and Zaporizhia. If the situation isn't brought under control, there could come a point where Ukrzaliznytsia can no longer cope with the challenges and, as a result, is physically unable to move cargo. A plan for sustaining rail transport under wartime conditions is needed, and it needs to be developed now, he said. This can only be achieved by maximizing the use of Ukrzaliznytsia's own locomotive repair capacity as well as contracts with EU enterprises. In addition, international grant financing is needed to purchase new locomotives, following a "rail Ramstein" model, similar to how military aid is coordinated.
The COO said production costs have risen by about 30%, driven mainly by logistics and electricity tariffs. That's a fairly substantial increase in costs that rules out planning major investments, so the company is in standby mode.
"We're trying to do everything we can to keep the company afloat. Unfortunately, we'll have to apply unpopular measures: maximum cost cutting, staff reductions and other response measures to keep the company afloat during this difficult period, and then ensure its recovery and development," Myronenko said.
He said the company is currently weighing its decisions, focusing primarily on administrative staff and the use of contractors across the group's processes — loading more work onto the company's own employees in areas where contractors were previously used, and then assessing what surplus staff remains, either to cut or redirect to other processes. In other words, the package of crisis measures centers on cost cutting.
"We've already dropped some projects that hadn't yet begun. But we're now in the second half of the year, a lot of equipment was purchased in the first two quarters, and some work has already been carried out. We've just finished repairing blast furnace No. 1 at Kamet Steel, which was hit. So there won't be a major reduction this year — 15-20% at most. We'll adjust our plans for next year," the top manager said, adding that gas generation and solar power plant construction projects are currently on hold.
On developing the domestic steel products market, Myronenko said he sees potential for increasing sales within Ukraine, but that potential isn't being realized. The problem, he said, is that Ukraine doesn't protect its own market — for example, it's buying increasing volumes of pipe from Turkey. In effect, that means Ukraine is buying Russian metal, since Turkish producers roll coil from cheap Russian slab.
"So European partners are giving us funds to support our economy, and Ukraine is spending them paying Russians for their metal in the form of imports. Great business," the COO said.
He added that the transition to green steelmaking is irreversible and will happen regardless, but that a country at war needs some kind of transition period. No one, he said, is currently going to give Kamet Steel a loan to build a DRI module and an electric furnace. As a result, the company has no access to financial markets and can't order equipment, yet it faces the same payment obligations as European producers.
"And all we're asking of the European Union right now is a deferral of this levy — at minimum, 2-3 years after the war ends; ideally, a 10-year transition period for Ukrainian producers, since the shift to green steelmaking is a fairly long-term investment project," he stressed.
He recalled that the group acquired a Romanian plant in Iași, intended to serve as a remote workshop for Zaporizhstal in order to keep Ukrainian assets supplied with work. But after the quotas were introduced, this model became unviable, and the plant may have to halt operations. About 250 people work there, plus roughly as many contractors again. Metinvest is therefore warning Romania's government that it could face a problem: the shutdown of a tax-paying, job-providing enterprise.
"We bought the plant for EUR 10 million, and it was effectively meeting our expectations until the quotas were introduced. When we arrived there in January, there was an administration and about 150 people. We started hiring, training, and got all the processes running. The quota is forcing us to choose where we can place product with higher returns, since our export options are limited. There's the Polish market, which is able to absorb all our coil at a higher price, and it's more efficient for us to supply it there than to ship it to Romania, process it into pipe, and sell the pipe. When there were no quotas, Romania was one of the alternatives to the southern direction — the Middle East or North Africa," the COO explained.
He added that the Promet plant in Bulgaria buys billets from Kamet Steel, since billets are not subject to duties or quotas, being a semi-finished product. Assets in Italy and the U.K. buy slabs from outside suppliers, since there is no slab production in Ukraine following the loss of Mariupol.
According to the top manager, the group's expansion into the European market is currently on hold given the present circumstances. As for the sale of its U.S. coal company, the deal is now in its final stage.
Metinvest is a vertically integrated group of mining and metallurgical enterprises. The group's plants are located mainly in Donetsk, Luhansk, Zaporizhia and Dnipropetrovsk regions. The holding's main shareholders are the SCM group (71.24%) and Smart-Holding (23.76%), which jointly manage it. Metinvest Holding LLC is the group's management company.