New EU limits on steel imports could destroy Ukraine’s industry and deal a big blow to the country’s budget as it defends itself against Russia, according to the head of its biggest steelmaker.

Yuriy Ryzhenkov, the chief executive of Metinvest, said the new EU quota system due on 1 July could “kill the Ukrainian steel industry”.

The EU has introduced the protectionist measures in the face of a long-running global glut of steel caused by China. The EU halved the quotas of steel that can enter the bloc tariff-free, while also doubling the tariff to a prohibitive 50% on all imports above each country’s allocation.

The EU’s decision has prompted a scramble among trade partners to try to negotiate a large enough share of the quota for their own steel industries. That includes the UK, where the industry has warned of an “existential threat” if it does not receive enough access to its largest export market.

For Ukraine the economic threat from its military ally is exacerbated by the war, which has cut off some of its previous alternative markets and pushed the country’s steelmakers to integrate more closely with Europe. They have also faced the extra costs of constant attacks on infrastructure since the start of the war in February 2022.

“In our view it’s an unfair approach,” Ryzhenkov said. “Ukraine does not present a significant threat to the EU steel industry. It’s simply not big enough.

“Killing off one of the functioning industries doesn’t seem wise. We don’t see any leniency towards Ukraine.”

Ukrainian steelmakers argue that the quotas would also damage the war effort by depriving the government of tax revenues equivalent to hundreds of millions of pounds. Metinvest, owned by the billionaire Rinat Akhmetov, is thought to be the largest private sector taxpayer in the country.

The quotas would come on top of levies added to imports to the EU, known as the carbon border adjustment mechanism, to penalise steel produced with dirtier blast furnace technology.

Ryzkenhov said it was not possible for Metinvest to invest the billions of euros it would cost to upgrade its two plants to cleaner electric arc furnaces because of the war – although it had planned to do so before Russia’s full-scale invasion.

Metinvest’s two steel plants near the eastern cities of Zaporizhzhia and Kamianske are running at about three-quarters and two-thirds of their capacity respectively.

The company is struggling with regular damage to the railways used to transport its products, as well as inconsistent electricity supply after years of Russia targeting Ukraine’s power grid. It has installed its own generators to help it to restart operations more quickly after blackouts.

Metinvest has lost several important assets because of the fighting. Early in the war Russian and Ukrainian forces fought a brutal battle over the Mariupol steelworks, which was totally destroyed. For the last year the company has also had to do without its coking coalmine in Pokrovsk, which is now a battleground.