Russian troops advance to large coal mine, Ukraine's steel industry worries

A destroyed bridge in the town of Pokrovsk in eastern Ukraine

As it advances toward the strategic supply center of Pokrovsk in eastern Ukraine, Russian troops are also advancing toward a coking coal mine that fuels the country's steel industry.

Russian forces have moved within 12 kilometers of the town of Pokrovsk in Donetsk, overwhelming Ukrainian defenders with superior numbers and equipment. Thousands of residents have been evacuated and key road and rail links from the town are at risk of being cut off, according to Reuters.

Sole source of coking coal

About 10 kilometers west of the town center, there is a mine that produces a special type of coal used to produce coke, an essential ingredient in steel production. Meanwhile, steel is second only to agriculture in terms of foreign exchange earnings for Ukraine.

According to trade data, Ukraine's metal exports were worth nearly $2 billion in the first eight months of this year, the amount needed to keep Ukraine running two and a half years after Russia invaded.

The loss of the Pokrovsk mine - the country's only source of coking coal - could cause steel production to fall, said Oleksandr Kalenkov, head of Ukraine's steelmakers' association.

"We can produce up to 7.5 million tonnes of steel by the end of this year and next year we have seen production increase to more than 10 million tonnes. But if we lose Pokrovsk we will be down to 2-3 million tonnes," he said.

Lack of fuel, loss of competitiveness

This dire warning is a reminder of how Ukraine's economy could be affected by Russia's military campaign.

Anatoliy Starovoit, head of the Ukrkoks coking coal association (Ukraine), said the country produced about 3.5 million tons of coking coal last year, using only raw materials from the mine in Pokrovsk.

"We don't know where to get coal if we lose Pokrovsk. It's very difficult to bring coal in by import, it's not easy to bring coal in by sea these days," he worried.

Ukraine has several deep-water ports on the Black Sea, but steelmakers would have difficulty importing large volumes of coal because of military risks and because the ports were built for export, not import.

Some manufacturers have stockpiled supplies in anticipation of possible supply disruptions.

A steel industry source said producers hoped to find alternative sources of coking coal from elsewhere in Ukraine if the Pokrovsk mines were lost, but imports would inevitably increase production costs, making steel less competitive.

Ukraine produced more than 4.3 million tonnes of rolled steel products from January to August 2024, of which 66% was exported. EU countries accounted for 72% of the export volume, according to the steelmakers' alliance.

Source: https://thanhnien.vn/quan-nga-tien-den-mo-than-lon-nganh-thep-ukraine-lo-185241017160330483.htm