Ukrainian steel industry, which generates about 7% of the country’s GDP and 15% of all exports of goods, faces a number of structural challenges that hinder its development and transition to low-carbon production. According to the study “Opportunities for rebuilding the iron & steel industry of Ukraine”, prepared for the OECD Steel Committee, the overall need for capital investment in “green” projects in the metallurgy reaches about $11 billion, or $1,500 per tonne of steel produced last year.
First of all, the industry suffers from extremely high energy costs. After the destruction of the energy system due to military aggression, Ukraine imports most of its electricity from the EU, and domestic tariffs have doubled over the past year. While 93% of European steel is produced in countries with significantly lower energy costs, domestic steelmakers are losing their competitiveness. Iron ore concentrate producers, where energy accounts for up to 60% of their cost, are particularly affected.
The shortage of skilled workers mobilized for the Armed Forces has led to significant staffing gaps (15–20% of personnel). Many companies are recruiting women, older people and veterans to the labor market, but this is not enough to ensure a full-scale resumption of production.Logistical and trade barriers are creating additional pressure: freight rates have doubled compared to pre-war levels, Ukrzaliznytsia plans to increase tariffs by 35–40% for MMC cargo, and the 28 existing restrictions on steel exports require revision - a quarter of them were introduced more than 20 years ago and no longer correspond to today's realities.In addition, the issue of access to coking coal remains unresolved: after the shutdown of the Pokrovske mine, Ukraine is forced to import up to 2.5 million tons of coking coal or coke annually, which increases production costs and complicates competition on global markets.
Against the background of the entry into force of the EU carbon border tax (CBAM), Ukrainian exporters risk losing up to $1.6 billion annually if they cannot implement “green” projects. Although the current regulation provides for “force majeure” exceptions for wartime cases, the government must apply to the European Commission with a separate request to apply them.Conclusion: without access to cheap “green” financing instruments, similar to those received by European steel producers, the Ukrainian metallurgy will not be able to effectively invest in energy-efficient technologies and restore lost capacity. Only with structural support — in the form of grants, long-term loans, and guaranteed purchases of “green” metal — will Ukraine be able not only to rebuild the industry, but also to gain a foothold in European low-carbon production chains, ensuring its own economic security and contributing to the continent’s climate goals.
Source: https://gmk.center/ua/opinion/sim-viklikiv-ukrainskoi-metalurgii-v-2025-roci-ta-poglyad-u-majbutnie/
