The cessation of operations at the Pokrovske mining group, which includes the Pokrovske Coal, due to changes on the frontline, will be compensated by importing coal from Metinvest's U.S.-based assets.

Denys Sakva, a senior analyst at investment firm Dragon Capital, shared this during a podcast hosted by the Centre for Economic Strategy on challenges in the metallurgy sector and the economic impact of losing Pokrovsk (Donetsk region).

"The Pokrovske Coal was an extremely important enterprise in the steel production chain. It was practically the only producer of high-quality coking coal in Ukraine, meeting almost all domestic needs in 2023. In 2024, imports began to rise as steel production increased. ArcelorMittal also started importing coking coal and coke," Sakva said.

He emphasized that the mine used to produce 2.5 million tonnes of coal concentrate annually, and this volume now needs to be imported.

Metinvest owns mines in the United States under the United Coal Company, but transporting this coal to Ukraine entails additional logistics costs and places a greater burden on ports and railways. Part of the coal will come from Europe, and ArcelorMittal Kryvyi Rih (AMKR) will also import coal.

According to Sakva, the Pokrovske Coal generated about UAH 4 billion in profit in the first half of 2024, contributing UAH 700 million in taxes and royalties.

Regarding Ukraine's overall metallurgy sector, Sakva noted that production grew in 2024 despite the loss of Mariupol, which was a severe blow to the industry as the city had modernized facilities for producing flat-rolled products. Currently, Zaporizhstal produces flat products, but the plant is not as modernized.

In 2024, steel production amounted to 7.5 million tonnes, and rolled product output slightly exceeded 6 million tonnes, of which one-third was consumed domestically, while 4 million tonnes were exported, generating $2.5 billion in revenue. Exports are conducted by both rail and the "sea corridor." Most exports go to Europe, but new markets, including Türkiye and Africa, have also opened up. Ukraine continues to export iron ore concentrate and pellets, including to China, with Metinvest, Ferrexpo, and AMKR being key exporters.

Sakva highlighted rising production costs due to higher energy prices, logistics, wages, and taxes.

"Demand for steel and iron ore, particularly in Europe, is currently very weak. So no one expects significant growth in 2025. Everything will depend heavily on China," he stated.

The analyst also mentioned the issue of the Carbon Border Adjustment Mechanism (CBAM) but expressed hope that Europe would accommodate Ukraine due to the ongoing war. Nonetheless, he noted that metallurgical companies would need to invest heavily in transforming their operations to reduce emissions and transition to green steel production.