Strikes on Ukraine’s Export Hubs Damage Key Commodity Facilities

(Bloomberg) -- Russian attacks on some of Ukraine’s key export hubs are damaging commodities infrastructure and mean it could be a long road until shipments fully recover.

Ukraine’s ports have been closed since the war began, and now some major grain-export facilities and steel plants have been severely hit by shelling. They include a site belonging to agribusiness giant Bunge Ltd. in Mykolayiv on the Black Sea, as well as the large Azovstal steel plant in Mariupol.

The country gets about 40% of its gross domestic product from exports. That includes roughly $8 billion from wheat and corn and $3.4 billion from iron ore, Observatory of Economic Complexity data show. While it’s seeking to open new routes by rail for selling goods such as crops, volumes could be small. Ukraine’s food companies are focused on securing local supplies, as hundreds of thousands face hunger and are without water and electricity.

“This is a war not only in the military sense, it’s an economic war, because Ukrainian exports are metals, chemicals, machine building, grain,” the country’s agriculture minister, Roman Leshchenko, told the European Parliament Tuesday. “Having destroyed our sea access, they are destroying us economically. We wouldn’t have any income to our budget. We wouldn’t have any means to survive as a state.” 

The Mykolayiv port -- where Bunge’s facility was hit -- has been a shipbuilding center for centuries and typically handles about a fifth of Ukraine’s grains volumes, supplying countries in the Middle East and Europe. Other international and local traders also have facilities in the region along the Black Sea.

Those with goods stored at Ukrainian ports “do not know if we will be able to ship our supplies,” said Saban Buttanri, the owner of Istanbul-based exporter Agrolino Grains and Oilseeds.

He had to evacuate his team just after the war began, leaving behind his office and storing supplies in a third-party warehouse.

In the besieged city of Mariupol, the Metinvest BV-owned Azovstal steel plant had to stop its furnaces amid severe damage from Russian shelling, General Director Enver Tskitishvili said on Facebook last week.

The hit to Ukraine’s export facilities comes on top of damage to food infrastructure, including shells destroying a frozen-chicken warehouse. Soldiers have also commandeered tractors and other farm equipment to build fortifications and tow armored vehicles.

“We understand that our other ports and infrastructure for agriculture exports will be destroyed within another couple of weeks,” Leshchenko said. Bloomberg reported on Wednesday that he has tendered his resignation.

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With assistance from Bloomberg