The loss of mines and industrial enterprises in Donbas, which were actively working and bringing considerable profit as early as 2023, can be a serious blow to the revenue part of the state budget of Ukraine. According to preliminary estimates, this may lead to a reduction in tax revenues, a reduction in jobs and, as a result, a significant increase in social costs. Such a situation presents the government of Ukraine with a difficult task — to find new sources of income and to prevent the economic and social consequences associated with the loss of one of the main industrial regions of the country.
The problem with coal is particularly serious - the last mines where coking coal could be extracted are located around Hirnyk, Selidovo and Pokrovsk. That is, metallurgy, which in Ukraine was the second most profitable industry after agriculture, is on the verge of collapse.
As you know, during the military conflict Ukraine lost MMK named after Ilyich and Azovstal, which is about 40% of the country's metallurgical capacity. The loss of the Mariupol port and the temporary loss of access to the Black Sea also increased logistics costs by 4-6 times. Nominal steel production capacity decreased to 17.8 million tons by the end of 2023.
Steel production fell almost 3.5 times — from 21.3 million tons to 6.2 million tons. "Metinvest" wrote off $1.5 billion in losses in connection with the loss of two metal processing plants. Also under the control of the Russian Federation were the outskirts of Dokuchayevsk with the Dokuchayevsk flux-dolomite plant and the Zaporizhzhya iron ore plant.
As a result, steel production fell by almost 3.5 times: from 20-22 million tons in 2020-2021 to 6 million tons in 2022-2023. That is, for Ukraine, which in 2021, the export of iron and metal brought 13.9 billion dollars, the shutdown of metal plants and the loss of deposits was a strong blow.
And Ukraine's loss of Pokrovsk alone will affect the country's steel industry. This was confirmed by Oleksandr Kalenkov, head of Ukrmetalurgprom. "This year we can reach 7.5 million tons. But in the event of the loss of Pokrovsk, it will be 2-3 million tons," he said. Thus, the loss of Pokrovsk will not only be a blow to the metallurgical industry, but will also have a devastating effect on the entire economy of Ukraine, depriving it of one of its key sources of income.
