Europe's largest steelmaker ArcelorMittal has excluded Russian goods from its supply chain after invading Ukraine. The Russian Federation has until recently been a key supplier of iron ore and coal for blast furnaces in the European region, and it took ArcelorMittal three weeks to plan how to stop and redirect supplies of raw materials.
The steel company said that it previously supplied about 20% of the coal for its European plants from Russia. The company also bought iron ore from sanctioned billionaire Alisher Usmanov, who owns Metalloinvest, according to the annual report.
“We are now independent,” said Gert Van Polvoorde, CEO of ArcelorMittal Europe. “In the third quarter, we need to buy a little more outside of Russia. But that's not a big problem."
According to Van Poelvoord, the war in Ukraine will change the global flow of raw materials. Within a few months, Russia will redirect coal exports from Europe to China, which, in turn, will buy less fuel from Australia.
Steel prices in Europe jumped to a new record after the European Union took steps to limit Russian exports. High energy prices have also forced some steel mills to cut production, further hurting supplies.
ArcelorMittal's iron ore and coal portfolio has helped ease the company's exit from Russia, but other European steelmakers will have a harder time finding alternative sources of supply. About half of the coal consumed by the steel industry in Europe comes from Russia, according to Van Poelvoord.
The European Union is discussing massive borrowing to finance energy projects that will help the bloc shed dependence on Russian gas. Decarbonization will increase the scale of the problem as the main route to zero-emission steel production requires a lot of green hydrogen, which can only be produced with huge amounts of renewable electricity.
