High electricity prices in Ukraine and unfavorable markets prevent us from increasing production – ArcelorMittal Kryvyi Rih

The company is ready to quickly increase the volume of production for the improvement of the situation

High electricity prices in Ukraine and unfavorable market conditions are hindering production growth. Mauro Longobardo, CEO of ArcelorMittal Kryvyi Rih, said this at the Global Perspective: Promoting Unity conference organized by the European Business Association, Metallurg newspaper reports.

The company’s CEO pointed to the rise in electricity prices for Ukrainian industrial producers due to the requirement to consume at least 80% of imported electricity to guarantee its uninterrupted supply as one of the internal factors hindering production growth.

He also considers the outflow of personnel caused by mobilization to be a significant problem for the company’s operations: ArcelorMittal Kryvyi Rih currently has more than a thousand unfilled vacancies.

Mauro Longobardo noted that the war has caused the domestic market, where the company has an advantage due to low logistics leverage, to shrink to 60% of the pre-war volume. This also limits sales.

In addition, a number of external factors, such as the cost of logistics, stagnant steel markets in Europe, and falling global iron ore prices, complicate the company’s operations.

“Therefore, to ensure the survival of the company, we are taking a number of measures to adapt production levels to the decline in demand in our markets and the level of prices for steel products in Ukraine and globally. We continue to monitor the market situation and are ready to quickly increase production volumes if the cost of electricity in Ukraine is at least equal to the European one or if demand in the European market increases. If the situation does not change, we do not rule out optimization measures to ensure the company’s survival,” he said.

Longobardo reminded that ArcelorMittal Kryvyi Rih, as the largest iron and steel plant in Ukraine and the largest foreign investment in Ukraine, is a strategic enterprise for the country. The plant has been located near the frontline for more than 2.5 years, survived seven blackouts, loss and restoration of water supply, and continues to operate and contribute to the budget of Ukraine and the city.

As GMK Center previously reported, ArcelorMittal Kryvyi Rih was ranked 9th in the NV.ua rating of the largest wartime investors, with capital investments of UAH 9 billion over two and a half years of war.