According to reports in local media, Ukraine's steel production faces a perilous future as Russian forces close in on Pokrovsk, a key coal mining region in Donetsk. The coal extracted from Pokrovsk is vital to Ukraine's steel industry, as it is the country’s only source of metallurgical coal, a critical ingredient in steelmaking. Oleksandr Kalenkov, head of Ukraine's Metallurgists Association, has warned that if the mine falls into Russian hands, steel production could plummet from a projected 7.5 million metric tons in 2024 to as low as 2 to 3 million metric tons. This significant reduction would not only affect Ukraine’s industrial output but would also have a ripple effect across its economy.
In 2023, Ukraine produced approximately 3.5 million metric tons of coke, a substance derived from coal and used in the steelmaking process. This production is entirely reliant on the Pokrovsk mine. If the mine is seized, Ukraine will be left without its primary supply of coal, leading to severe disruptions in steel production. Anatoliy Starovoit, the head of the Ukrkoks association, emphasized the difficulty in sourcing alternative supplies. While there may be some potential for sourcing coking coal from other regions of Ukraine, such imports are costly and complex. The logistical challenges of importing coal via sea would further increase production costs, making Ukrainian steel less competitive in global markets.
The strategic importance of Pokrovsk extends beyond its coal resources. The mine’s location in the Donetsk Oblast, an area central to Ukraine’s industrial activities, has made it a target in the ongoing conflict. The loss of Pokrovsk would not only hinder steel production but also threaten the livelihoods of thousands who depend on the mining and steel industries. This disruption would significantly affect Ukraine’s ability to generate revenue, further destabilizing an economy already under strain from the ongoing war.
Ukraine had hoped to increase its steel output to over 10 million metric tons by 2025, aiming to expand its share in the global steel market. The country has made significant strides in modernizing its steel plants and improving production efficiency. However, without access to metallurgical coal, these efforts could be undone. The Ukrainian government and metallurgical associations have urged for alternative solutions, including the possibility of sourcing coal from foreign suppliers, but these alternatives remain financially unfeasible in the short term.
Beyond production issues, Ukraine’s steel industry is also facing challenges related to global competition. The loss of a key production resource like Pokrovsk would make Ukrainian steel less competitive, especially against countries with abundant coal reserves, such as Russia and China. The increased cost of imports would make it harder for Ukraine to maintain its position in the global steel market, potentially leading to a decline in exports. Given that steel is a major export commodity for Ukraine, any drop in production would significantly impact the nation’s foreign exchange earnings.
Despite these challenges, some industry sources remain hopeful that alternative sources of coking coal could be found within Ukraine’s borders. However, the time required to identify and develop new coal sources could prolong the disruption to steel production. In the meantime, Ukrainian steel producers are bracing for higher costs and reduced competitiveness, which could have lasting effects on the nation’s industrial landscape.
The situation in Pokrovsk highlights the broader impact of the ongoing conflict on Ukraine’s industrial sectors. As the war continues to reshape the country’s economy, industries like steel production are facing existential threats. The potential loss of the Pokrovsk mine serves as a stark reminder of the vulnerability of Ukraine’s critical infrastructure in times of war.
