Port Blockade Hits Iron Ore Exports: Ukraine Could Lose Millions of Dollars

At the end of July, port operations in Ukraine effectively halted due to the security situation in the Black Sea. Besides the agricultural sector, the metallurgical industry also suffered serious losses, as this route was one of the key channels for exporting iron ore and other products.

Who has already stopped work

Already on Wednesday, 5 August, the Swiss company Ferrexpo announced a temporary suspension of production in Ukraine. The reason for this decision cited military risks, Reuters reports.

However, matters had not been going well even before. The shares of the iron ore pellet producer, which is now trying to avoid bankruptcy, have not been traded on the London Stock Exchange since May. According to an initial estimate, financial resources will last until mid-September.

At the same time, meeting obligations to European clients is currently possible thanks to existing stock levels. By the way, Ferrexpo owns the Poltava Mining and Processing Plant, and its largest shareholder is Kostyantyn Zhevago.

In addition, due to constant Russian attacks on civilian merchant vessels, the process of halting production and temporarily reducing output began in advance at the Southern Mining and Processing Plant in Kryvyi Rih, Dnipropetrovsk region.

How this will affect Ukrainian exports

According to Stanislav Zinchenko, CEO of GMK Center, the port closures put almost half of domestic iron ore product exports at risk, i.e., 1 million tons per month, NV reports.

As a result, Ukraine could be losing 60 – 70 million dollars in monthly export revenue, or 700 – 800 million dollars on an annual basis, while output in the iron ore sector risks falling by about 40%.

A rapid normalization of the situation is not expected, because even after the opening of the sea corridor in 2023 year it took at least 3 – 4 months from the start of vessel trials.

According to Prime Minister Serhiy Koretsky, the government, diplomatic corps, and all responsible state institutions are working around the clock to unblock the ports. Moreover, this issue is under the personal control of the president. 'We are coordinating work with international partners, working on diversifying supply channels,' the official added.