Ukraine's ArcelorMittal Krivoi Rog to end 2024 with losses due to tariffs, logistics

MOSCOW. Dec 25 (Interfax) - Ukraine's ArcelorMittal Krivoi Rog Mining and Metallurgical Plant, based in the Dnepropetrovsk region, will close 2024 with losses due to high tariffs, logistical costs and unfavorable situation on foreign markets, and it hopes to achieve break-even in 2025, the company's CEO Mauro Longobardo said in an interview with Ukrainian media.

"The approximate forecast is around $100 million in cash losses, give or take. My goal at the beginning of the year was to achieve a cash-neutral position, avoiding the need for financial injections from the group, but this is not happening. This also includes investments we must make: an annual Capex [capital expenditures] of $150 million is necessary for the company's survival," Longobardo said.

The 2022 capex was expected between $500 million and $550 million, he said. Although, 2022 saw minimal investments, maintaining 50% steel production and up to 75% of possible mining output now requires $150 million annually.

Strategic investments include constructing the Map III tailings storage facility for mining waste, he said, noting that failure to complete it would halt ore extraction. "This $150 million is the minimum," he said.

He also referred to extraordinary events. In June 2024, a blackout caused a fire at Coke Battery No. 5, he said, adding that it is still inoperable restoring as it is hard to repair it. This resulted in additional costs reaching several million U.S. dollars monthly for coke purchases and from $10 million to $15 million for repairs, he said.

These challenges prevented achieving a break-even position, he said. Longobardo expressed gratitude for the group's support during this period but said that rising tariffs make self-sufficiency difficult. He said that electricity costs in 2024 accounted for 70% of his company's total expenses, alongside burdensome logistics tariffs from Ukrainian Railways. "Tariffs are killing us," Longobardo said, adding that the goal remains to reach break-even in 2025.

ArcelorMittal Krivoi Rog is the largest producer of rolled steel in Ukraine. The company specializes in the production of long steel products, in particular, rebar and wire rod.

ArcelorMittal owns ArcelorMittal Krivoi Rog, the largest mining and metallurgical plant in Ukraine, along with several smaller enterprises in Ukraine, such as ArcelorMittal Berislav.