The Metinvest Group has announced that it is suspending production at two ore mining and beneficiation plants in Kryvyi Rih (the Inhulets and Southern ore mining and beneficiation plants) and switching Kamet Steel to operating only one blast furnace due to logistical factors, an increase in the cost of production, and a drop in the prices of steel products.
The Metinvest Group made this announcement in a statement, the CFTS portal reports.
Production at the Northern ore mining and beneficiation plant will also be suspended from mid-July 2022. Of the group's ore mining and beneficiation plants in Ukraine, only the Central ore mining and beneficiation plant will continue to operate (at reduced capacity).
According to the statement, the suspension of production at the ore mining and beneficiation plants and the switch to the operation of one blast furnace at Kamet Steel are a forced measure that the group has delayed as much as possible since February 24 by relying on its own reserves.
"The main factor is the continuation of the Russian invasion of Ukraine. But the country's economic situation also remains difficult and has a tendency to worsen due to several destabilizing factors that do not allow our enterprises to operate fully and plan their operations for more than a month in advance," Metinvest said in the statement.
According to the statement, the main factors are changes in ore mining and beneficiation plants’ logistical routes and supply chains within the country and elevated costs of transporting goods to end users.
"The group previously delivered its products by sea. We are forced to deliver them by rail because ports are currently being blockaded. Logistics costs have increased significantly compared to the pre-war period. In addition, stocks of metal products are accumulating throughout the entire supply chain, and our finished products are delayed for months at the border with the EU," the company said.
The other factors cited by the group include the high cost of production of metal products, which is constantly rising due to the increase in energy prices; the significant drop in the world prices of iron and steel; a reduction in demand for metal products; a reduction in the demand for iron ore due to a fall in the production of metal products at European enterprises.
The company emphasized that its employees would be engaged in repair and maintenance work at the above-mentioned facilities and that it would continue to pay their base salaries.