Ukraine’s Metinvest says studying construction of DRI-fed EAF steel plant in EU

Ukrainian mining and steel company Metinvest is studying options for the construction somewhere in the EU of a plant to process the company’s iron ore into direct reduced iron (DRI) and then convert it into steel, according to Metinvest CEO Yyriy Ryzhenkov, with Italy or Bulgaria seen as the likeliest options.

Initially, Metinvest had been considering expanding rolling capacity at its plate and coil mill Ferriera Valsider in the province of Verona, Italy, or building a finishing facility to process slab shipped from Azovstal Iron and Steel Works in Mariupol, in east Ukraine’s Donetsk Oblast, which is currently under Russian occupation.

Now, with Azovstal slabs unavailable for the foreseeable future, the company is looking at shipping iron ore to the EU instead, converting it into DRI and then smelting it into steel. Routes for iron ore transportation into the EU that are already in place could be expanded if necessary, Ryzhenkov said in an interview with local media. The company confirmed his comments following a request by S&P Global Commodity Insights.

In early 2022, Metinvest said it intended to replace the majority of its blast furnaces and basic oxygen furnaces at its two Mariupol-based steelworks — Azovstal and Ilyich — with electric arc furnaces by 2040, with the first EAF and at least one DRI module expected online by 2030.

With eastern regions of Ukraine being occupied and investments in industrial upgrades elsewhere in Ukraine deemed unrealistic for the time being, Metinvest is looking for ways to offset its slab capacity losses.

In Q2 2021, the company allocated $1 billion to revamp its rolling operations at Ilyich and contracted Italian engineering company Danieli to supply a 1.6 million mt/year cold-rolling, galvanizing and color-coating complex. The company also intended to complete the construction of the air separation plant at Ilyich and to rebuild de-dusting systems at Azovstal’s BOF shop.

At this stage, it is not clear though whether those investment commitments could now be switched to secure different equipment for the potential EU plant, which would turn Metinvest’s iron ore into high value-added steel products.

The company had already been developing the production of DR-grade pellets at its Central iron ore mining and beneficiation complex (GOK) in Dnipropetrovsk region, eastern Ukraine, since 2020, with 2021 output reaching 2.2 million mt, and before the war it was looking to set up a 5 million mt/year capacity DR-grade pellet plant at its Severny, or Northern, GOK too. However, although Severny has recently tested the production of high-quality pellets, as a prerequisite of improving it further to DR-grade material, implementing the project in full requires investments, and these will not be possible while the war is ongoing.

To feed its re-rolling mills outside Ukraine — in Bulgaria, Italy and the UK — Metinvest continues to sourcing third-party slabs, including from Southeast Asia and the EU, where it purchases semis from Italian flat steel producer Acciaierie d’Italia.

In addition, the company has developed production of rolled slabs at its 49%-owned Zaporizhstal iron and steel works in Zaporizhia, south Ukraine, which processes ingots supplied by long-rolled steel producer Kamet Steel, based at Kamianske in Ukraine’s Dnipropetrovsk region.

— Ekaterina Bouckley