During the war, Ukraine’s metallurgical industry has lost part of its GDP contribution, yet it continues to play a key role in the economy despite the ongoing conflict.
Ukrainian metallurgy, which for decades has been one of the backbone sectors of the economy, remains an important factor of macroeconomic stability even under the conditions of full-scale war.
Before the Russian invasion, the mining and metals sector accounted for more than 10% of GDP and about one-third of Ukraine’s merchandise exports, generating a significant share of foreign currency earnings and tax payments, according to an article by NV, as reported by the PromPolitInform portal.
In 2021, the contribution of the mining and metals complex (MMC) to the economy amounted to 10.3% of GDP, including related industries and consumer spending by employees. The share of metallurgy in exports reached nearly 33% — $22.2 billion in foreign currency revenues. That same year, industry enterprises paid about $3.5 billion in taxes and fees.
Before the war, metallurgy functioned as a large-scale economic ecosystem: steel formed the foundation for machine-building, construction, energy, and the defense industry. One worker in the sector created jobs for four more people in related industries, and every thirteenth salaried employee in Ukraine was connected to metallurgy.
The industry played a city-forming role in Zaporizhzhia, Dnipro, Kryvyi Rih, and Mariupol. In particular, more than 10,000 people worked at Azovstal, around 14,000 at the Illich Iron and Steel Works, and nearly 20,000 at ArcelorMittal Kryvyi Rih.
The Situation After 2022
Following the start of the full-scale war, the sector suffered significant losses. Enterprises in Mariupol, which accounted for about 40% of steel production, fell under occupation. This led to the loss of 40% of pig iron exports and around 30% of rolled steel exports. By the end of 2024, metallurgy’s contribution had declined to 7.2% of GDP, while exports of mining and metallurgical products fell to $6.4 billion, or 15.4% of total merchandise exports. Tax revenues from the MMC decreased to approximately $1 billion.
Despite this, the industry continues to invest. In 2024, capital investments by metallurgical enterprises totaled $650 million — 18.3% of all industrial investments. This is 8.3% more than in 2023. In particular, the assets of the Metinvest Group in 2025 were directed toward energy independence projects, including the construction of gas-fired power plants to ensure stable operations during blackouts.
Today, metallurgy is seen as the material foundation of post-war reconstruction — from infrastructure restoration to residential construction. The sector also supplies the needs of the defense-industrial complex, including the production of armored elements, protective structures, and engineering fortifications.
Integration with the EU
Integration with the European market remains a separate challenge. The EU is the main destination for Ukrainian steel exports — accounting for about 64% of shipments. At the same time, starting in 2026, the European Union will implement the Carbon Border Adjustment Mechanism (CBAM), creating additional barriers for exports. No decision has yet been made regarding possible deferrals or exemptions for Ukraine.
According to forecasts, steel production in Ukraine may increase to 6.7–7 million tons in 2026, compared to 6.2 million tons in the first 10 months of 2025. About 55% of output will continue to be exported due to limited domestic demand. Key restraining factors include unstable energy supply, high electricity costs, logistics tariffs, labor shortages, and wartime risks.
Over the past five years, Ukraine’s largest metallurgical enterprises have paid UAH 190 billion (approximately $6.2 billion) in taxes and fees. In 2024, tax revenues from four metallurgical companies accounted for 1.6% of total consolidated budget revenues. However, experts warn that rising tariffs of state monopolies and increased freight tariffs by Ukrzaliznytsia could lead to production cuts and the loss of this source of budget revenues.
It is worth noting that the Cabinet of Ministers has banned the export of scrap metal and timber until the end of 2026.
Photo: facebook.com/metinvest
