ArcelorMittal Kryvyi Rih and Interpipe Steel, two of Ukraine's leading steel producers, have expressed serious concerns about the new regulation introduced by the Ukrainian government, which requires companies to import at least 80% of their electricity consumption.
As of 1 June, the Ukrainian government has decided that the guarantee of unlimited electricity supply will only apply to enterprises that will import at least 80% of their consumption. Previously, this ratio was 30% from May to September 2023 and 50% from October 2023 to April 2024.
Representatives of ArcelorMittal Kryvyi Rih said that this decision will have serious negative consequences for the company, industry, region and budgets at various levels. According to them, the main problem is that the cost of electricity, which must be imported from Poland, Slovakia, Hungary and Romania, is more than double the cost of electricity paid by competitors in Western European countries. This makes production significantly unprofitable and uncompetitive in the global metallurgical products market. If the situation does not change, ArcelorMittal Kryvyi Rih will be forced to cut production and lay off about 1,200 employees.
Interpipe Steel has already expressed the same view. Electricity accounts for around 25% of the cost of steel billets supplied to steel pipe and railway plants as part of the Group's vertical integration.
"Such decisions by the Government require thorough calculations and justification, and they necessitate the search for a balanced solution for the industry, and consequently, for the economy of the country as a whole," said the CEO of ArcelorMittal Kryvyi Rih, Mauro Longobardo. He also added: "We call on the Government to review the decision and reduce the obligation of the national minimum volume of electricity imports to the level of 50% during the year, by making changes to the Resolution of the CMU dated May 30, 2024, No. 611."
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