➤ Miner and steelmaker PJSC ArcelorMittal Kryvyi Rih is working to cut emissions and curb dependence on Russian and Belarusian spare trucks and locomotives.

➤ Its steel output dropped to roughly 20% of capacity in 2022 as costs spiked amid weak European demand and efforts to "reinvent ... logistics routes from scratch."

➤ The company hopes to return to 50% of capacity in 2023 if power supply can be maintained to stabilize operations after a year of multiple blackouts and missile attacks that killed an employee in December.

ArcelorMittal Kryvyi Rih CEO Mauro Longobardo. Source: ArcelorMittal Kryvyi Rih

The steelworks and mining operations of ArcelorMittal SA's Ukraine unit, ArcelorMittal Kryvyi Rih, have continued at sharply reduced levels in the year since Russia's invasion, as the company has grappled with forced suspensions during Russian shelling in the area, frequent power outages and having to reinvent logistics on the fly.

As Ukraine's largest full production-cycle steel mill and one of Europe's largest, ArcelorMittal Kryvyi Rih is essential to Ukraine's war effort and eventual economic rebuilding.

Despite numerous challenges, ArcelorMittal Kryvyi Rih has persisted in reducing emissions and modernizing its operations. In 2021, ArcelorMittal pledged to invest nearly $1 billion in upgrading its Ukrainian steel facilities after ArcelorMittal Executive Chairman Lakshmi Mittal met Ukraine President Volodymyr Zelenskyy in Kyiv.

S&P Global Commodity Insights interviewed ArcelorMittal Kryvyi Rih CEO Mauro Longobardo about those plans and how the company has managed to keep operating during the war. The interview has been edited for clarity and length.

. This article is part of a series covering the impact of Russia's invasion of Ukraine on the metals and mining sector. Russian war reconfigures commodity supply flows Ukraine aims for critical minerals after the war Ukrainian metal-makers' woes grow as attacks intensify ArcelorMittal Kryvyi Rih continues ESG effort amid war Rusal outruns sanctions, plans expansion Traders profit by navigating invasion uncertainty Russian potash exports rebound, expansion at risk Russian metals face shaky 2023 as China's demand cools Nornickel loses partners amid war, seeks new suppliers .

S&P Global Commodity Insights: ArcelorMittal Kryvyi Rih's 2022 report said coke production pollutant emissions were reduced by 37% with the closure of coke batteries 1 and 2. What investments will be made in 2023 to reduce your steelmaking emissions?

Mauro Longobardo: Plans for environmental-related investments in 2023 include continuing with the engineering of the gas cleaning plants' blast oven furnace — one of our major environmental projects, which we still aim to progress in spite of the war and cash crisis. Also, we plan to install water cannons in a sinter plant to reduce dust levels from storing and reloading materials and to get gas cleaning plants ready for full-fledged operation.

We are finishing modernizing seven locomotives with modern engines for reduced emissions; receiving and commissioning four Caterpillar 136-tonne heavy dump trucks with more efficient engines for the open-pit mine; and rebricking walls in coke oven batteries, which will ensure raw coke oven gas is not going to the heating system, adhering to environmental norms.

We are commissioning air quality monitoring posts at the mining complex impact area and replacing chiller machines at air separation units. There are several projects aimed at reducing natural gas consumption, thus controlling carbon dioxide emissions.

As you can see, some of the projects have multiple benefits, including maintenance of equipment fleet, cutting emissions and reducing our dependence on Russian and Belarusian spare trucks and locomotives.

How have you managed to continue operating despite frequent blackouts and other impacts of the war?

In 2022, we had to shut down and restart critical equipment multiple times from the very beginning of the large-scale war and after sudden blackouts in autumn. We had to tackle a lack of raw materials supply caused by the closure of borders and survive [Russia's] blockade of [Ukrainian] Black Sea ports. We had to reinvent our logistics routes from scratch, which took its toll on our cost of production. This, combined with the European lack of demand for steel, has led to production falling to 20% of capacity. Currently, we operate coke batteries 5 and 6, a smaller blast furnace, a converter and one continuous casting machine. The production of rolled products and the mining department depend on the availability of electricity.

In December 2022, a missile strike occurred at ArcelorMittal Kryvyi Rih territory. Unfortunately, an employee died due to this attack. Three people were wounded and they have incisions and shell fragment wounds.

After massive attacks on Ukrainian energy infrastructure, the situation became more complicated for our plant. With limited power supply, we needed to maintain the balance of electricity consumption and the operations of our production units, taking into account safe shutdown and commissioning. When emergency shutdown schedules were introduced after the blackouts, the company was forced to sharply limit electricity consumption and temporarily suspend steelmaking and output of rolled steel products. The team made great efforts to prevent complications.

Do you plan to increase steel production this year?

Power supply will be the key factor in 2023 for stabilization and stepwise recovery of production. Nevertheless, we plan to hold our share of the domestic market and increase finished products shipment to the European Union.

ArcelorMittal Kryvyi Rih's annual production capacity is over 6 million tonnes of steel, more than 5 Mt of rolled products and over 5.5 Mt of hot metal. In 2023, we plan at least to maintain the production level of 2022. If electricity supply is stable and we preserve the logistical possibility to transport the products across Poland or southern Ukraine to Romania, we would be able to be more efficient and the plant will return to production levels at 50% of our capacity.

How are your continued operations important to Ukraine and its war effort?

ArcelorMittal Kryvyi Rih is one of the biggest taxpayers in Ukraine. In 2022, tax payments to various level budgets amounted to 8.8 billion hryvnia in taxes and levies, and 3.4 billion hryvnia of these were paid to the national budget and 2.1 billion hryvnia to the local budgets. The company also transferred almost 1 billion hryvnia of unified social tax and 2.3 billion hryvnia of value-added tax during the import of raw and other materials. ArcelorMittal Kryvyi Rih also prepaid mining tax worth $75 million to support the Ukrainian government.

After the war started, thanks to the UNICEF fundraising platform, ArcelorMittal's employees from all over the world raised over €2.5 million, which ArcelorMittal SA matched.

The company committed $350,000 to humanitarian efforts and to the procurement of medical supplies for the community of Kryvyi Rih. ArcelorMittal Kryvyi Rih provided the military administration of Kryvyi Rih with 11 ambulances worth 11 million hryvnia to work in the areas bordering the hostilities.

Mining and steelmaking make the foundation of the Ukrainian economy. ArcelorMittal SA believes in Ukraine and is doing whatever it can to support the country right now and to help it rebuild itself for a prosperous future.

As of Feb. 21, US$1 was equivalent to 36.69 Ukrainian hryvnia.

S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.