Implementing MMK's investment program requires at least 15% profitability, was 4% in May - Rashnikov

CHELYABINSK. June 24 (Interfax) - Magnitogorsk Iron & Steel Works' (MMK) investment program could be implemented with profitability of least 15%, though the figure was 4% in May and has continued to decline in June, Viktor Rashnikov, MMK's chairman of the board of directors and largest shareholder and beneficiary, said on Friday at a meeting of the Chelyabinsk regional branch of the Union of Industrialists and Entrepreneurs.

"Profitability was 4% in May, and it would be good if we generate a profit in June of 1% here or 1.6% there, though this is generally dreadful. We have never operated like this," Rashnikov said. "The [production] volumes [are tonnes] instead of the millions that we produced every month last year, while we load only 600,000 tonnes today, and we have stopped two blast furnaces. We are working at 55% [capacity]. There is no profit here."

Rashnikov added that, "The investment program is being halted. In order to implement the investment program that we have today, we need to have at least 15% profitability."

Rashnikov also noted that although coal and iron ore suppliers are lowering prices for supplied products, there is little room for maneuvering.

"We are working with both ore and coal miners that are lowering [prices] in some areas, though not yet to the fullest, so to speak. However, they also have a margin that is not so large, and you cannot squeeze it, as the saying goes," Rashnikov said.