The basis of Ukrainian economy is mining and metals industry now gradually looses its value.
Investments into modernization of Ukrainian production facilities in mining and metallurgical industry during the first half of 2010 were $193 M. In 2009 it was $646 M. But the actual annual requirement in investments is at least $1.8 B. Totally to complete modernization of mining and metallurgical industry in Ukraine it is needed at least $16 B.As Yuri Ryzhkov, analysts from Astrum investment management informs, to complete modernization of domestic production capacities is possible not earlier than 2016. “Local steelmakers could complete renovation of their production by 2016-2020 investing $16-20 B in it" – he says.
Situation is sharpened also by weak local demand for metal and as consequence – domination of export dependence. Ukraine is the only economy in the world with absolute domination of steel export. Only 20% of produced steel is consumed within the country. This situation is kept since 2004.Moreover, while world steel production by process distributes as 70% BOF/30% EAF and only 0.7% of steel is produced by open-hearth process, in Ukraine not less than 25% of steel is smelted in open hearth furnaces, only 5% of steel is produced in electric arc furnaces, and the rest is by BF-BOF process. This gives great advantage to the competitors of Ukrainian steelmakers both in quality of steel and in its production costs.