Iron and steel companies need realistic and stable electricity prices – Mauro Longobardo

Realistic and stable electricity prices are key to supporting current and future investors in Ukraine’s steel and mining industries. This can be achieved by introducing a price cap for energy-intensive enterprises and long-term contracts with fixed rates, as well as by increasing price competition between state-owned energy producers.

This was stated by Mauro Longobardo, CEO of ArcelorMittal Kryvyi Rih, during his speech at the United by Mining forum.

ArcelorMittal Kryvyi Rih is operating at a loss in the context of the war. Although the parent company has provided support in excess of $1 billion, this situation is unacceptable in the long term.

«From a stability perspective, the situation is critical for us. Our total net losses in 2022-2024 amounted to almost $2.1 billion. The main reason for these losses in recent years is the sharp increase in electricity tariffs set by Ukrainian state-owned energy producers, which occupy a monopoly position,» said Mauro Longobardo.

According to him, for most of the first half of this year, electricity prices in Ukraine were the highest in Europe. As a result, the share of electricity costs in the price of products has tripled, making the company’s operations unprofitable.

In this regard, ArcelorMittal Kryvyi Rih PJSC appealed to the Ukrainian government with a proposal to implement the following measures:

• introduce a price cap for Ukrainian energy-intensive enterprises;
• develop regulatory mechanisms to create competitive conditions between state-owned power generating companies, for example, based on the French model;
• develop mechanisms for long-term contracts with fixed rates.

As reported by GMK Center, the problem of high transmission and distribution tariffs, as well as the constant increase in the cost of electricity, is negatively affecting the entire Ukrainian industry. One of the most acute problems is the inability to predict prices and, consequently, the production process, as well as the lack of open information about the energy system balance.

It should be noted that indexation of rail freight tariffs could also create a major problem for ArcelorMittal Kryvyi Rih, as it would effectively mean shifting Ukrainian Railways’ losses onto shippers. The company’s position is that the state-owned carrier should be supported by the state.