Zaporizhstal resuming production, planning to increase output

KYIV. April 11 (Interfax-Ukraine) - The Zaporizhstal metallurgical plant operated by Metinvest of Rinat Akhmetov and Vadym Novynsky is resuming production and planning to increase the steel output.

Zaporizhstal CEO Oleksandr Myronenko said in an interview with the Ukraine 24 television channel what was necessary for resuming production to the fullest extent.

The Ukrainian economy is steadily recovering, and it's time for a change after a period of shock and crisis, Myronenko said. Strategic enterprises, national industrial giants that are critical to the wellbeing of Ukraine, are the first ones to recover, he said, adding that Metinvest Group resumed production at a number of enterprises, including Zaporizhstal, in the Zaporizhzhya region alone over the past week.

"We have resumed operation of the Zaporizhzhya Casting & Mechanical Plant, coke production by Zaporizhcoke, and activity of Zaporizhvohnetryv," the top manager said.

Those were preparations for relaunching the primary metallurgical asset, Zaporizhstal. Blast Furnaces No. 4 and No. 3 have been fueled. For now, the enterprise will be operating two furnaces, and 65,000 tonnes of pig iron will be produced in April, in addition to 150,000 to 170,000 tonnes in May, he said.

The enterprise has had to adjust to new chains of raw material supply and product delivery, Myronenko said.

"Traditionally, we were receiving and supplying everything through Ukrainian marine ports, but they are blocked now. So, we are working together with the authorities and Ukrzaliznytsia to create new supply chains and use Western checkpoints to receive raw materials and to ship our products," he said.

The recent events in Ukraine have drastically reshaped the global market, Myronenko said. For instance, the enterprise had no access to European markets until recently. When Europe stopped buying metal from Russia, the demand for Ukrainian metal products became constant. "Now we can ship everything we make to our European partners - this is tangible assistance and good support from our European partners," he said.

Other ways of shipping products, besides railways, are under consideration, Myronenko said. "The difficulties are significant, considering that Western border checkpoints are not built to handle such amounts of products. Not just our metal, but also coal and iron ore are being shipped through them. It will take time to adjust supply and transshipment chains, because we are using wide tracks, and tracks are narrow in Europe, he said. In his opinion, it will be necessary to open hubs where cargo will be reloaded on European tracks and shipped to buyers.

It is possible to fully compensate for metal products lost by Europe, but that will take time, Myronenko said.

Zaporizhstal is a major industrial enterprise of Ukraine specializing in high-quality hot-rolled steel coil, hot-rolled sheet, cold-rolled sheet, cold-rolled coil made of carbon and low-alloy steels, as well as steel strip, black tin, and bent profile.

The products are mostly supplied to manufacturers of welded pipes, cars, road and agricultural machinery, and household appliances.

Zaporizhstal is being integrated into Metinvest Group whose primary shareholders are System Capital Management (71.24%) and Smart Holding Group (23.76%).

LLC Metinvest Holding is the management company of Metinvest Group.