ArcelorMittal Krivoi Rog halts mining and steelmaking due to rail logistics services disruptions
MOSCOW. May 7 (Interfax) - ArcelorMittal Krivoi Rog (AMKR) has halted mining and steel production facilities due to logistics disruptions on the part of Ukraine Railways (JSC Ukrzaliznytsia), Ukrainian media reported, quoting a company press release.
Over the past month, the company has been unable to receive enough feedstock to ensure continuous production, and inventory has fallen critically low. Flux supply disruptions are systemic and are putting the stable operations of several key production units at risk. This disruption has also affected iron ore concentrate shipments, bringing ore mining to a halt.
"We have to say that this situation was caused not by objective circumstances, but rather inadequate planning and distribution of shipments by Ukrainian Railways. Ensuring stable supplies for one of the country's largest industrial enterprises is not the most difficult task, but in practice, it is not happening. They simply aren't delivering this key raw material without which we can't produce pig iron, which, as a result, seriously affects our entire value chain. Also, they are not providing trains to ship the concentrate we produce, forcing us to halt mining," AMKR said.
AMKR was forced a few days ago to shut down one of its two blast furnaces, two sintering machines, and an ore beneficiation plant until flux supplies resume and at least minimal inventory of this raw material is restored. If the situation does not improve within a few days, the second blast furnace will also be shut down.
If supply disruptions continue the company will be forced to suspend more capacity, including a second blast furnace, other sintering machines, and another beneficiation plant, which will be even more damaging for production.
"We also draw attention to the fact that in this situation, Ukrainian Railways continues to focus on increasing tariffs, whilst the priority should be ensuring the quality, timeliness and reliability of transport. The situation that has arisen is already having a direct impact on production, the company's economic performance, and, consequently, on budget revenues at all levels," AMKR said.
AMKR expects Ukrainian Railways to take prompt action to stabilize supplies and restore logistics predictability.
"We remain open to constructive dialog, but we emphasize that ignoring the problem further will have system-wide ramifications for the Ukrainian mining and metallurgical industry," it said.
Ukrainian Railways rejected AMKR's accusations and urged the company to join a security initiative being carried out with other metallurgical companies, Ukrainian media reported.
"AMKR has, unfortunately, refused to join, and has resorted to blackmail instead," the media quoted a press release on the Ukrainian Railways website as saying.
"Company representatives have said they are 'handling their own security issues independently and privately,'" Ukrainian Railways said.
The company also said it backed AMKR's initiative to bring in rolling stock for rail freight transportation. "An agreement on this was drafted quickly and sent to AMKR, but this initiative proved to be merely a declaration and there has been no further action," Ukrainian Railways said.
"We propose that further communication be conducted not through the exchange of press releases, but through direct routine interaction," Ukrainian Railways said.
ArcelorMittal Krivoi Rog, from the Dnepropetrovsk region, is the largest producer of rolled steel in Ukraine. The company specializes in making long steel products, in particular, rebar and wire rod.
ArcelorMittal's assets in Ukraine include AMKR along with several smaller enterprises, such as ArcelorMittal Berislav.
