You're reading: Blockade causes full stoppage at Donetsk metallurgical plant (UPDATED)

The Donetsk metallurgical plant, part of Donetsksteel Group, on Feb. 27 stopped operating its only active blast furnace, N1, over lack of iron ore as a result of a railway blockade in the disengagement zone and discontinued supplies of the raw material.

On Feb. 27 the daytime shift melted 400 tonnes of cast iron and blast furnace N1 stopped working, a company representative told Interfax.

The furnace used to produce 1,400-1,700 tonnes of cast iron per day, around 1,500 tonnes on average, he said. The second blast furnace has been out of work for a long time, so only one was operational.

“The cause of the stoppage is precisely the shortage of iron ore. The coke was supplied from the Makiivka coke and chemical plant, there were no problems with it,” the company representative said.

For its part, the head of the Ukrainian Federation of Metallurgists, Serhiy Bilenky, wrote on his Facebook page on Feb. 27 that Ukraine’s mining and metal industry is sustaining losses.

“I would not like readers of this story [on Feb. 24 the agency said that the investment company Dragon Capital revised down the potential monthly losses of the Metinvest holding company caused by stoppage of the Yenakiyeve Metal and Steel Works and Krasnodonvuhillia, both operating pump compressor pipes, due to the railway blockade in the anti-terrorist operation zone, to $6-10 million from the earlier projected $30 million] to feel certain optimism about the blockade situation not causing major damage to the economy, that losses are not that significant and one ‘could live with’ the blockade. That is not so,” Bilenky said.

He noted that only Metinvest incurred monthly losses of $6-10 million. Unlike other such companies, it is vertically integrated and thus insured, in a way, against market fluctuations.

“That is not so in the case of other companies. The country’s losses are snowballing with every railcar of metal, ore and finished products not allowed across the dividing line. The annual budget is short of Hr 2.5-3 billion, the country won’t receive $2.5 billion in foreign-currency proceeds, around 45,000 jobs will have to be cut, including 25,000 in the [central government-] controlled territory. This is a major disaster for the economy: something has to be done about it urgently,” the head of the industry union said.

It was reported that in January 2017 Donetsksteel-metallurgical plant cut smelting operations by 12.2 percent from the same period in 2016 to 43,000 tonnes. In December, it produced 51,000 tonnes of cast iron.

The company has not been producing steel since discontinuing the blast furnace process in April 2012 and because the construction of a steelmaking complex is still in progress.

In 2016, the metallurgical plant increased its smelting operations by 38.2 percent on 2015 to 778,000 tonnes.

The private joint-stock company Donetsksteel-metallurgical plant was set up around the facilities of the Donetsk Metallurgical Plant. It specializes in manufacturing metal products (60 percent of its gross earnings) and selling coke (40 percent).

Donetsksteel-metallurgical plant is part of Donetsksteel Group which also includes, among others, the Yasyniv coking chemical plant, the Makiyivka coking chemical plant and the Pokrovsk Coal Company (formerly, Chervoarmiyska-Zakhida N1).