By Eric Onstad
LONDON (Reuters) – Ukraine’s largest steelmaker Metinvest needs to invest $20-30 billion in coming years to replace four coal-fired blast furnaces with new equipment to cut carbon emissions, its chief executive said.
Privately held Metinvest BV aims to cut greenhouse gas emissions by 15% by 2030 and by 40% after another 10 years, CEO Yuriy Ryzhenkov told Reuters in an interview on Wednesday.
The company is fortunate because the global move to slash carbon dioxide emissions has coincided with aging equipment that will need to be replaced or refurbished in coming years anyway, Ryzhenkov added.
“Since we’re coming to the end of our investment cycle, we are able to put the new technology straight in.”
The global steel industry is one of the three biggest producers of carbon dioxide and companies are increasingly under pressure to reduce emissions.
Investors focused on climate change have said emissions from the industry must fall 91% by 2050 to meet a net zero scenario laid out by the International Energy Agency.
Metinvest says it plans to meet that goal. It plans to start replacing blast furnaces with electric arc furnaces in 2028 when it expects to have ramped up output of direct reduced iron (DRI) needed for the process.
The firm, majority owned by Ukraine’s richest man and business magnate Rinat Akhmetov, produces about 40 million tonnes of iron ore a year, about half of which is suitable for being processed into DRI.
Metinvest produces around 13-14 million tonnes of crude steel a year.
Strong global steel demand has driven prices and last month Metinvest posted nine-month 2021 EBITDA, or earnings before interest, tax, depreciation and amortisation, that more than quadrupled year on year to $6.1 billion.
“We’re cautiously optimistic, (but) obviously this year is not going to be as great as 2021,” Ryzhenkov said.
With the bumper profits, Metinvest aims to reduce debt and shift to bonds linked to specific projects, Ryzhenkov said.
The company has already cut total debt by 24% to $2.25 billion in 2021 as of end September, and further debt reduction is on the cards for 2022, he added.
“We’d like to change the profile of the debt. Instead of just general purpose debts, we’d like to have more project debt… which is more long-term and cheaper.”
When asked about the potential impact of a Russian invasion of Ukraine on the company, a spokesperson they were not in a position to comment because this was a political situation.
(Reporting by Eric Onstad; Editing by Frank Jack Daniel)
