The Kryvyi Rih Mining and Metallurgical Plant of PJSC "ArcelorMittal Kryvyi Rih" (AMKR, Dnipropetrovsk region) is expected to conclude 2024 with a loss due to high tariffs, logistics costs, and adverse conditions in international markets. However, the company hopes to break even in 2025, stated the CEO Mauro Longobardo in an interview with Interfax-Ukraine.
"The estimated 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 so that we wouldn't need financial infusions from the group, but this is not happening. At the same time, I take into account the investments that need to be made: Capex (capital expenditures – IF-U) per year is $150 million to ensure the company's survival," the CEO said.
According to him, in 2022, Capex was supposed to be $500-550 million, as it was before the war. When the war began, the first year of investments was very low, but overall, to maintain 50% steel production and 75% or the maximum possible in mineral extraction, the company needs about $150 million annually.
"We also have significant strategic investments – we are building the tailings storage facility 'Karta III' (a waste storage site for iron ore extraction – IF-U). If we do not construct it, we will halt ore extraction. Therefore, there is a certain need for investments – if you do not do this, you will stop. And $150 million is the minimum," the top manager explained.
He also pointed out emergencies. For instance, in June 2024, an incident occurred at the plant: there was a blackout, and a fire broke out at coke battery No. 5, which has not been operational since, as it is very difficult to restore it to working condition. This has led to additional costs - about several million dollars monthly for coke purchases. Another $10-15 million was needed for the repair of the coke battery after the fire.
"All of this has prevented us from bringing losses down to 'zero'. We are very grateful to our group for their support during this challenging period, but our goal remains unchanged – to manage on our own. It is very unfortunate that due to these constant tariff changes, we will not be able to achieve it. Electricity costs in 2024 account for 70% of our total expenses. The same situation applies to 'Ukrzaliznytsia' tariffs: this logistics is killing me, and I may not be able to reach my goal again – to break even. Although our aim is to reach 'zero' in 2025," Longobardo emphasized.
"ArcelorMittal Kryvyi Rih" is the largest producer of steel products in Ukraine, specializing in the production of long products, particularly rebar and wire rod.
ArcelorMittal owns the largest mining and metallurgical plant in Ukraine, "ArcelorMittal Kryvyi Rih," as well as several smaller companies, including PJSC "ArcelorMittal Berislav."