Ukraine’s mining and metals industry is caught in a perfect storm. With major seaports no longer available for normal exports, companies are being forced to route iron ore through the Danube, Constanta, and Gdansk. These alternatives are so expensive that the economics of many operations no longer work. Mining and processing plants are suspending operations, while the national railway is adding further pressure by raising freight tariffs.
Every alternative export route comes with additional costs. Shipping through Gdansk adds approximately $50–60 per tonne to the cost of iron ore pellets. The Danube corridor can handle only around 10% of Ukraine’s previous export volumes, while Romania’s Port of Constanta is already struggling with congestion.
Overall, Western logistics costs are estimated to be 80–90% higher than before. This does not include additional risks such as low water levels on the Danube, which can disrupt or even halt barge traffic at short notice.
Mining and processing plants are increasingly operating in survival mode. The Yuzhny and Inhulets mining and processing plants have suspended operations, while the Poltava plant is operating at minimal capacity. Ukraine’s steel industry has lost as much as half of its export volumes. Companies that remain relatively resilient are mainly producers of pipes, railway wheelsets, and other higher-value products capable of absorbing transport costs.
Against this backdrop, Ukrzaliznytsia, Ukraine’s national railway operator, has announced a 30% increase in freight tariffs. Industry participants have reacted with frustration, arguing that the sector was already facing an unprecedented logistics crisis.
Ukraine’s mining and metals industry is now squeezed between disrupted maritime access, expensive Western transport routes, and rising domestic rail costs. Without a fundamental solution to the country’s port and export logistics problems, the sector is likely to continue shrinking toward a narrower group of higher-margin, niche products.
Source: @Metals_Mining
Image: Robert Michael / ZB / Global Look Press
