ArcelorMittal Kryvyi Rih warns govt about threat of shutdown due to 70% increase in railway tariffs
PJSC ArcelorMittal Kryvyi Rih (Dnipropetrovsk region) warns Ukraine's government about the threat of a shutdown due to a 70% increase in railway tariffs.
As reported in a letter from the company to First Deputy Prime Minister and Minister of Economy Yulia Svyrydenko, the text of which is at the disposal of Interfax-Ukraine, due to the increase in railway tariffs by 70%, the functioning of the enterprise was under threat.
At the same time, it is noted that after the commissioning of blast furnace No. 6, converter and rolling shops in April-June of this year, the enterprise began to export cast iron and unprecedented volumes of iron ore concentrate. As a result, about 650,000 tonnes of products were sold in June, including 200,000 tonnes of metal products and 450,000 tonnes of iron ore concentrate.
"We had to make a number of difficult decisions in order to balance the issue of the physical safety of workers and our desire to increase export volumes, which provide foreign exchange earnings to the economy and the survival of our enterprise," the letter, dated July 5 this year, states.
However, due to the decision of the Ministry of Infrastructure to increase railway tariffs from July 1, 2022, as well as the continued blocking of Black Sea ports, logistics costs increased by 400%. At the same time, prices for metal products on world markets fell by more than $300/tonne, and for iron ore concentrate by more than $40/tonne.
The letter states that an increase in transportation costs, together with a decrease in the cost of mining and metallurgical products on international markets, can lead to a complete halt in production.
"We see this increase in railway tariffs as a significant threat to the operation of our enterprise, our ability to function, provide jobs and replenish state and local budgets," the plant's letter says. Its administration is urging the government to find a balanced solution.
Earlier, Metinvest Group announced the suspension or reduction of production at mining and metal enterprises.
ArcelorMittal Kryvyi Rih is the largest producer of rolled steel in Ukraine. It specializes in production of long products, in particular rebar and wire rod.