Metinvest drops plans to construct rolling mill in Italian region

Ukraine’s largest iron ore, coking coal and steel
producer Metinvest (METINV) dropped its plans to construct a rolling mill in Noghere
(Italy), according to a Jan. 19 report by triesteallnews.it, a local news site,
which cited local newspapers that in turn cited Metinvest.

Metinvest planned to implement the EUR 700 mln project
in collaboration with Danieli, the report said. The reason for the project’s
rejection was the timing, as the area where the mill was to be constructed
required five years of reclamation work, whereas Metinvest and Danieli wanted
to start the operation within two years.

Metinvest might be conducting parallel negotiations
for implementation of a similar project in another Italian region, according to
italy24news.com.

Recall, in December Metinvest’s CEO, Yuriy Ryzhenkov,
mentioned a project of constructing a hot-rolling mill in Italy
as one of Metinvest’s three capex priorities for the next few years. Ryzhenkov
said that the mill would have the capacity of 2.5 mmt per year of HRC. Some
previous media reports mentioned a capacity of 4 mmt per year.

Dmytro Khoroshun: Metinvest
is well-positioned for collaborative investments after amending certain terms and conditions of its notes
and paying up to USD 1.8 bln in dividends
in 10M21.

In 2021, Metinvest has sold about 1.6-1.7 mmt of
slabs, the semi-finished products that are re-rolled into high-value-added
products, we estimate. Therefore, the holding has plentiful upstream capacity
for investing in the downstream re-rolling mills. We expect Metinvest to pursue
such projects before it fully focuses on decarbonization.

We maintain our neutral view on METINV bonds.