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Metinvest to invest $ 20-30 billion to reduce steel emissions, CEO says

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LONDON – Ukraine’s largest steelmaker, Metinvest, is to invest $ 20 billion to $ 30 billion in the coming years to replace four coal-fired blast furnaces with new equipment to cut carbon emissions, its chief executive said.

The private company Metinvest BV aims to reduce greenhouse gas emissions by 15% by 2030 and by 40% after another 10 years, CEO Yuriy Ryzhenkov told Reuters on Wednesday in an interview.

The company is in luck because the global decision to cut carbon dioxide emissions has coincided with aging equipment that will need to be replaced or refurbished in the coming years anyway, Ryzhenkov added.

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“As we come to the end of our investment cycle, we are able to directly integrate the new technology. “

The global steel industry is one of the three biggest producers of carbon dioxide and companies are increasingly forced to reduce their emissions.

Climate change-focused investors said industry emissions needed to drop 91% by 2050 to reach a net zero scenario defined by the International Energy Agency.

Metinvest says it plans to achieve this goal. He plans to start replacing blast furnaces with electric arc furnaces in 2028, when he expects to increase the production of direct reduced iron (DRI) needed for the process.

The company, majority owned by Ukraine’s richest man and business tycoon, Rinat Akhmetov, produces around 40 million tonnes of iron ore per year, about half of which can be made into DRI.

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Metinvest produces around 13-14 million tonnes of crude steel per year.

Strong global demand for steel drove prices higher and last month Metinvest posted nine-month EBITDA in 2021, or earnings before interest, taxes, depreciation and amortization, which more than quadrupled from year to year. the other to reach $ 6.1 billion.

“We’re cautiously optimistic, (but) obviously this year won’t be as good as 2021,” Ryzhenkov said.

With the windfall profits, Metinvest aims to reduce debt and switch to specific project obligations, Ryzhenkov said.

The company has already reduced its total debt by 24% to $ 2.25 billion in 2021 by the end of September, and further debt reduction is planned for 2022, he added.

“We would like to change the debt profile. Instead of just general purpose debt, we would like to have more project debt… which is longer term and cheaper. “

Asked about the potential impact of a Russian invasion of Ukraine on the company, a spokesperson was unable to comment because it was a political situation. (Reporting by Eric Onstad; Editing by Frank Jack Daniel)