Russia finances RUB 10 bln for steel inputs in occupied Ukraine

The Russian government ruled on May 4 that its reserve fund will provide state entity Rosreverv RUB 10 bln (USD 175 mln) for the “financing of costs related to the recovery of stocks of raw materials for metallurgy,” the rbc.ru news site reported on May 11. Rosreserv, which never before was reported to have purchased any metallurgical materials, was recently involved in supplies of iron ore to steel mills located on the occupied parts of Donbas, rbc.ru earlier reported. Rosreserv’s head also commented that the entity is providing humanitarian aid to enterprises located in Donbas.

Recall, Ukrainian iron ore producers stopped supplying any materials for steel mills on occupied Donbas since February 10-11, when Ukrainian activists blocked all railway connections from mainland Ukraine. On March 15, the trade blockade of the occupied territories was officially imposed by the Ukrainian president, and Ukraine’s largest steel holding Metinvest (METINV) declared its loss of control over Yenakiyeve Steel and other enterprises located in occupied parts of the Donetsk and Luhansk regions.

On April 11, Metinvest warned the self-declared Donetsk government against any use of assets over which it lost control. In late April, the Donetsk separatists declared their intention to restore steel production at Yenakiyeve plant.

Alexander Paraschiy: These developments suggest the Russian government is ready to use its money to finance metallurgical production in occupied Donbas. It’s very unlikely to profit off that, so this money will most likely be lost. Instead, this should be viewed as payment to the separatists to help prevent social unrest after production at the steel mills was halted. This also indicates that Metinvest’s warnings against the use of its property by third parties are ineffective.