How Metinvest Is Navigating a Collapse in Capital Spending
Prior to 2022, Metinvest—one of Ukraine’s largest private investors—poured roughly $1 billion annually into upgrading its production assets. But after losing half its business to the war, the group’s yearly investment has plunged to between $250 million and $280 million. The company is now focusing on energy projects, including the installation of gas piston power plants with a combined capacity of 29 MW, and it plans to build solar facilities totaling 37 MW.
Where the Money Is Going Now
Metinvest’s investment priorities today center on three areas: preserving existing production capacity, keeping its plants running reliably, and building out its own energy infrastructure. On the international front, the group is constructing a green steel plant in Italy and has acquired a pipe factory in Romania. The plan is to supply the new Italian facility with hot-rolled coil from Zaporizhstal, while producing low-CO₂ hot-briquetted iron (HBI) in Ukraine for export to Italy.
Yet the company faces major roadblocks when it tries to make new investments. The biggest hurdles include a challenging European steel market, new EU safeguard measures, quotas, and the bloc’s Carbon Border Adjustment Mechanism (CBAM). As Oleksandr Vodoviz, head of the Metinvest CEO’s office, puts it:
“Today, everyone wants to get into the European market. But Europe is protecting itself—it’s imposing quotas, and CBAM is in effect. These factors are influencing our investment plans even more than the war.”
Ukrainian firms have also been cut off from the resources of major international banks and institutional investors because of the conflict. They face restrictions from state-owned banks, complicated compliance procedures, and a lack of effective war-risk insurance. Vodoviz stressed:
“Large investments depend on access to institutional investors. They will only come to Ukraine once at least some part of the war risk is insured.”
Since February 24, 2022, Metinvest has already invested more than UAH 28 billion. The core of its investment activity is keeping production running—its mining and processing plants in Kryvyi Rih are operating at roughly half capacity. If the current barriers to investment, especially the shortage of affordable financing, can be overcome, conditions might emerge for attracting substantial state-backed investment, including creating frameworks for lending to industrial and energy projects.
Metinvest’s predicament reflects broader challenges facing Ukraine’s economy during the war. Lost market share and restricted access to international finance make it harder to rebuild and grow the industrial base. Establishing workable war-risk insurance mechanisms and improving the overall investment climate will be critical for restoring Ukraine’s economic stability and boosting its global competitiveness.
As Metinvest adapts to the current challenges in the steel market, the company has also made significant changes to its product development strategy. This shift is evident in how the firm has reduced its development cycle from years to mere weeks, allowing for quicker responses to market demands. To learn more about these rapid changes and their implications for Metinvest's future, read about how the company is streamlining its product development process.