Page 6 - bne_October 2021_20211004

6 I Companies & Markets bne October 2021
according to analytics website SteelOrbis, as cited by the Kyiv Post.
“We pay dividends on a par with our peers,” says Ryzhenko. “It's the cash we take in minus capex, debt payments, and what we consider necessary as working capital (about $500mn). The rest goes to dividends.”
And those dividends will increase now that Metinvest has used some of the extra cash it earned to pay down debt.
In March Metinvest repaid $150mn of its pre-export loan facility ahead of schedule, according to the company’s March 26 investor release. And then in June it repurchased around $150mn of its 2023 Eurobonds from investors.
“We are deleveraging,” says Ryzhenko. “We have already reduced the debt by $1bn and in the third quarter we will pay more, bringing the reduction this year to about $1.3bn. That will leave a total of $2.2bn but the next big payment will only be in 2023 and for only less than $200mn.”
Outlook
Ukraine’s economy has been recovering and the leading companies like Metinvest continue to invest and improve their operations, but Ukraine remains in transition and fragile. Growing from a low base is easy, says Ryzhenko, but he remains cautious on the future, which remains uncertain.
“The growth in the first half of this year was 3%, which is not bad, and 5.4% in the second quarter, but that is compared to a 7% contraction in the second quarter of 2020, so it's not as impressive as it sounds,” says Ryzhenko. “There is also a good commodity
EV market may create copper deficit
Dimitri Frolowsckii of Neo
Auto fleets' shift to electric vehicles (EVs) in a global drive to cut carbon emissions will involve a drawdown on copper that could transform markets, and spur additional supply.
Cars powered by electricity are able to push a greener agenda by eliminating petrol emissions and creating a market for renewable energy. Renewable sources, such as wind and solar, are increasingly replacing coal in power generation. The key commodity for EVs will be copper. For that the world is currently looking at developing new projects.
www.bne.eu
cycle – iron, steel, grain are all up. That helps the government and gives them more taxes and improves the balance of payments. But these are several unusual things that depend on the world’s economy. They are all external factors and those tend to change. They are not driven
by internal changes.”
Ryzhenko says that the coronacrisis has been fairly benign and in particular was not accompanied by any sort of financial crisis. Indeed, as bne IntelliNews has reported, the banking sector was already cleaned up and in robust health going into the pandemic and after.
Having lived through multiple crises in 2008, 2014 and now again in 2020, Ukraine’s top managers have learned to be cautious as they have to keep in the back of their minds that the chances of yet another crisis is more than likely.
Nevertheless, there are internal changes that are also lifting the economy. Construction and the real estate sector has taken off and is now growing strongly, although it is still early days. Incomes are rising and the government has started to spend on infrastructure, says Ryzhenko.
“Are all these factors enough to sustain growth? The problem is the reforms that the government are doing, or [rather], not doing,” says Ryzhenko. “There are still too many complex regulations that are holding back growth: regulations to establish a new business are too complex, the tax system
is unpredictable, a new law going through the Rada now would make it that the tax man’s decisions are never wrong. There are many issues. What we need is a consistent and understand[able] system built with a long-term approach.”
The EV revolution will dramatically increase the demand for copper. And there may not be enough to meet demand in the coming years.
According to the IEA, copper will remain the most broadly used metal in renewable energy technologies. For instance, a battery EV uses 83kg of copper, compared with the 23kg of copper in an internal combustion engine vehicle. Additionally, batteries and chargers require a lot of copper, while renewables, such as wind and solar power generation, require tonnes of copper.
The world’s two largest economies are headed along this (copper-based) greener path. China’s will continue to grow amid a pledge to shift to greener practices. US President Joe