Azovstal continues to produce steel despite war

Tuesday, 23 September 2014 17:39:34 (GMT+3)   |  
       

Ukraine's largest vertically-integrated mining and steel group Metinvest has stated that at its Ukraine-based subsidiary Azovstal's survival tactics amid the current conflict in the country range from bypassing dangerous routes for supplies to inspecting and re-stocking shelters for workers in case of shelling.

"We have major complications with logistics. Donetsk is almost cut off, we have almost no shipments through Donetsk," said Enver Skitishvili, general director of Azovstal.

Azovstal was also forced to diversify coking coal supplies and start shipping goods and raw materials by sea to compensate for the loss of its main supply route.

The existing shipment capacities are not enough to supply the steel company with all required raw materials, meaning that much of its capacity is under-used. Mr. Skitishvili stated that he expects a drop of 30 percent in production across the board because of this problem, but insisted that so far it has not affected the company's financial performance. "Because we went to more expensive markets...we have lost just 10-15 percent in monetary terms, no more," he said.

Azovstal has been one of the luckiest companies in the region, however. By August, only a third of production capacities were in business in Donbas, according to a recent report that regional governor Serhiy Taruta delivered to Ukraine's cabinet of ministers. For the coke and chemical industries, the share of production capacity in operation was down to 20 percent.

In the coal industry, the business situation is even graver: up to 75 percent of all mines have been either completely destroyed or damaged because of war.