ArcelorMittal Kryvyi Rih’s estimated losses for the year will be in the range of $100 million in cash

PJSC ArcelorMittal Kryvyi Rih (AMKR) expects losses of approximately $100 million in cash by the end of 2024. Mauro Longobardo, the company’s CEO, said this in an interview with Interfax-Ukraine.

According to him, at the beginning of this year, the company’s goal was to achieve a cash neutral position and not need cash injections from the group. However, this is not happening. At the same time, the amount of wartime capital investment required for the company’s survival is $150 million per year. At the same time, it was planned that in 2022 Capex should have amounted to $500-550 million, as before the war.

The CEO of ArcelorMittal Kryvyi Rih recalled that large strategic investments are needed, as the Karta III tailings dump is under construction, and without its construction, the company will stop ore mining.

“So there is a certain need for investment – if you don’t do it, you will stop. And $150 million is the minimum,” he said.

In addition, according to Longobardo, emergency situations should be taken into account. For example, in June 2024, an incident occurred at the plant: there was a blackout, a fire broke out at coke oven battery No. 5, which has not been operating since then.

“It is very difficult to bring it back into operation. It required additional expenses of several million dollars a month, because we need to buy coke that we do not produce. And another $10-15 million to repair the coke oven battery, which we did not expect to have a fire,” said the AMKR CEO.

All these factors, he noted, prevented the company from reducing its losses to zero. Currently, the company is surviving thanks to the help of its parent company ArcelorMittal, but the goal remains the same – to manage on its own.

At the same time, Mauro Longobardo states that the company will not be able to achieve this due to constant changes in tariffs. In particular, the cost of electricity in 2024 will account for 70% of ArcelorMittal Kryvyi Rih’s total losses.

“It’s the same story with Ukrainian Railways’ tariffs: I’m being ‘killed’ by this logistics and may not be able to achieve my goal of break-even again. Although our goal is to break even in 2025,” he said.

The Ukrainian iron and steel industry is facing not only rising tariffs from Ukrainian natural monopolies, which pass on their losses to businesses through higher prices for products and services, a shortage of staff due to mobilization and other negative factors, but also low steel prices on global markets, which leads to a reduction in production and loss of competitiveness by Ukrainian steelmakers.

As GMK Center reported earlier, ArcelorMittal Kryvyi Rih will operate a single blast furnace in the first quarter of 2025. The company is currently operating at 30% of its steelmaking and 70-75% of its mining capacity.