“The Biggest Challenge is Keeping People’s Morale Up” — Yuriy Ryzhenkov on Metinvest’s Operations over Three Years of War
In a recent interview with BBC Talking Business, Yuriy Ryzhenkov, the CEO of Metinvest Group, highlighted the tough journey of his company and its employees during the ongoing conflict in Ukraine. Since the Russian invasion in 2022, Metinvest, one of Ukraine's largest steelmakers, has been battling against a range of challenges, including asset losses, logistical disruptions, and significant energy issues. Despite these obstacles, Ryzhenkov emphasized the importance of resilience, leadership, and continued investment to ensure the company’s survival and future growth.
A Devastating Loss of Assets
Metinvest’s story during the war is one of resilience in the face of adversity. Ryzhenkov revealed that Metinvest has suffered the loss of approximately 40% of its assets, including some of Ukraine’s most crucial industrial sites. Among the hardest-hit facilities were Azovstal and Ilyich Steel, two of the largest steel plants in Ukraine. These plants were instrumental not only in steel production but also in the economic vitality of the region. Their loss has been a devastating blow to the company’s output capacity and its ability to serve international markets.
The devastation of these key assets is compounded by the ongoing blockade of Black Sea ports, which has historically been a critical logistics route for exporting steel and iron ore. With major shipping routes closed off, Metinvest was forced to find alternative ways to deliver its products, stretching its logistical capabilities. Fortunately, with the reopening of Black Sea ports in 2023 and 2024, Metinvest managed to regain some of its global reach, exporting products to Far East Asia and Europe, though it operates at the limit of its available resources.
Energy Crisis: A Heavy Burden on Operations
One of the most significant hurdles Metinvest faced last year was the disruption of power supplies. Ukraine’s power grid was severely impacted during the conflict, with unpredictable electricity prices and sporadic power cuts creating substantial challenges for industrial operations. To keep its operations viable, Metinvest was forced to shut down less energy-efficient facilities. This difficult decision was driven by the need to optimize energy consumption and maintain profitability in a market where costs were unpredictable and rising.
Ryzhenkov explained that the decision to close some facilities had long-term consequences for the company’s production output. While this reduced operational capacity, it helped the company minimize costs and ensure that the most essential operations continued without excessive risk of technological breakdowns. Metinvest also had to manage operations carefully to prevent any major accidents resulting from energy shortages, a process that put considerable stress on the technical staff, who had to adapt to rapidly changing conditions.
Challenges in Iron Ore Production
Another critical area for Metinvest is its iron ore production, a vital resource for both domestic and international markets. Iron ore production was heavily impacted by the high cost of electricity tariffs, and with energy disruptions, many of the mining facilities could not operate at full capacity. For instance, one of Metinvest's key mining and processing facilities was idled for most of last year and continues to remain offline. This has hindered the group’s ability to provide a steady flow of iron ore, which is crucial for both steel production and Ukraine’s economic stability.
Ryzhenkov noted that securing energy stability is essential for Ukraine’s long-term industrial recovery. Without affordable and reliable electricity, many facilities, including those that provide critical iron ore supplies, cannot return to pre-war production levels. This is one of the most pressing issues that Metinvest faces, as the company’s future growth relies heavily on the restoration of its full operational capacity.
Keeping Employee Morale High
In the face of such adversity, Ryzhenkov stressed that one of the biggest challenges has been keeping the morale of employees high. The war has not only disrupted operations but also caused immense psychological strain for the workers. Yet, through a series of initiatives, Metinvest has been able to support its employees through the crisis.
The company has provided essential support for its workforce, including those who are serving in the Ukrainian army. Over 8,000 Metinvest employees have been mobilized, and the company has provided them with military gear, equipment, and financial support. This initiative is part of Metinvest’s broader commitment to the war effort and the resilience of its people. Furthermore, the company has rolled out psychological recovery programs, family assistance, and workplace adaptation programs to help employees reintegrate and recover from their wartime experiences.
Metinvest’s efforts to take care of its workers go beyond just military support. The company has created safe working conditions within its facilities, ensuring that workers have a sense of security despite the ongoing conflict. Additionally, programs to attract and reintegrate military veterans into the workforce are actively being developed, ensuring that returning soldiers have the opportunity to restart their careers with the company.
Supporting Ukraine’s Defense and Economic Recovery
Ryzhenkov also touched on Metinvest’s broader commitment to Ukraine’s defense efforts. The company, led by its owner Rinat Akhmetov, has been a significant contributor to Ukraine’s defense forces, providing financial support for military gear, armored vehicles, and humanitarian aid. In fact, Akhmetov is recognized as one of the largest private contributors to Ukraine’s defense, a stance that is strongly supported by Metinvest’s leadership.
As Ukraine continues to fight for its sovereignty, Ryzhenkov emphasized the inseparable link between business and defense. A thriving, successful business is not only crucial for economic recovery but also essential for sustaining the defense effort. Without the continuous operation of companies like Metinvest, Ukraine would face even greater challenges in defending itself.
Investment Opportunities in Ukraine’s Post-War Economy
Despite the challenges, Ryzhenkov remains optimistic about Ukraine’s post-war future. He pointed out that there are numerous investment opportunities in sectors like rare earth metals, agriculture, and high-value manufacturing. Ukraine's automotive and appliance industries also have strong potential for recovery and growth.
Metinvest itself is positioning itself for the future by investing in innovation and sustainable practices. The company is looking to expand its capabilities, particularly in the areas of recycling, green steel production, and energy efficiency, which will be crucial as the global economy shifts toward decarbonization and sustainability. Ryzhenkov believes that once Ukraine secures a post-war peace agreement, the country will see a wave of investment, driving economic recovery and creating new opportunities for growth.
Key Takeaways:
• 40% Asset Losses: Metinvest has lost approximately 40% of its assets since the onset of the war, including Azovstal and Ilyich Steel, two of Ukraine’s largest steel plants.
• Logistical Hurdles: The blockade of Black Sea ports severely disrupted product exports but was mitigated by the reopening of ports in 2023 and 2024, enabling exports to Far East Asia and Europe.
• Energy Crisis: High electricity tariffs and unpredictable power supplies forced Metinvest to shut down less energy-efficient facilities, impacting its overall production capacity.
• Iron Ore Production Challenges: Iron ore mining facilities have faced significant disruptions due to energy shortages, with one facility still idle since mid-2024.
• Employee Support: Metinvest provided military gear and financial support for over 8,000 employees in the Ukrainian army, alongside psychological recovery programs and family assistance.
• Defense and Business Synergy: Metinvest’s top management fully supports its owner’s contributions to Ukraine’s defense efforts, including significant contributions to military aid and humanitarian support.
• Post-War Investment Opportunities: Ukraine holds vast potential for investment in rare earth metals, agriculture, automotive, and appliance manufacturing, all areas ripe for development once the conflict subsides.
Metinvest continues to battle on multiple fronts, navigating the difficulties posed by war while striving to create a future where the company and Ukraine itself can thrive once again.
