Increase in railway tariffs may finally stop production of ferroalloys – UkrFA

The Ukrainian Association of Ferroalloy Producers (UkrFA) is asking the government to take measures to prevent an increase in railway tariffs during the period of martial law.

According to the appeal, this step could ultimately halt ferroalloy production in the country.

In addition, the association calls for a transparent consultation mechanism between the government, the Ministry of Community and Territorial Development, industrial associations, and Ukrainian Railways (UZ) when discussing tariff decisions and their impact on the industry.

The association expresses its categorical position on the inadmissibility of another increase in tariffs for rail freight transportation and the intentions of JSC Ukrainian Railways to once again solve its own problems at the expense of other industries by indexing tariffs by 40%. As emphasized by the UkrFA, the freight transportation segment of UZ remains a highly profitable area even in wartime.

As emphasized, Ukraine’s ferroalloy industry was virtually shut down at the beginning of the full-scale invasion and only gradually began to resume production in April-May 2024. However, due to a number of problematic issues – staff shortages, high electricity prices, and logistical constraints – it remains unprofitable to this day. UkrFA notes that the prospects of reaching at least a “zero” level of profitability seem very remote.

Ferrosilicon plants are operating at only 10% of their capacity in an attempt to maintain continuity of production. More than 85% of raw materials and finished products are transported by rail, so any increase in tariffs instantly destroys the economic logic of production.

“The introduction of a new round of tariff pressure will lead not only to a decline in domestic production, but also to an increase in imports of ferroalloys, which will cause an outflow of currency and a loss of tax revenues,” the statement said.

Enterprises in the industry continue to operate: both to ensure the fulfillment of already signed contracts and because their electric furnaces participate in regulating the Ukrainian power system, as well as performing social functions. Any additional financial burden on an already unprofitable production will lead to its reduction, up to and including the shutdown of technological processes.

UkrFA emphasizes that this, in turn, will not only destroy an entire industry, but also critically affect Ukraine’s economy and national security.

Earlier, Ukrmetprom called for refraining from raising railway tariffs in 2025-2026. The association of enterprises once again warned of the extremely negative consequences of this step for industry and exports.