gmk.center
In particular, railway tariffs for imported manganese raw materials will rise by 25.5%.
CEO of Ukrainian Ferroalloy Producers Association (UkrFA) Serhiy Kudriavtsev says the new tariffs set by the Ukrainian state-owned railway operator Ukrzaliznytsia (Ukrainian Railways) may lead to some of the group's plants halting their operations.
According to the Association, the price of rail transportation for JSC Nikopol Ferroalloy Plant will rise by UAH 8.4 million (US$301,616) with VAT per month, or more than UAH 100 million ($3.6 million) with VAT per year, Kudriavtsev told GMK-Center on December 19.
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In particular, railway tariffs for imported manganese raw materials will rise by 25.5%, for local manganese raw materials (OJSC Marganets Ore Mining and Processing Enterprise) – by 11.5%, and for slag and crushed stone – by 14.7% on average.
"Considering that manganese raw materials are the main strategic resource for JSC Nikopol Ferroalloy Plant (annual consumption of more than 2,200 tonnes), such changes will lead to a worsening of the economic condition of the enterprise and its competitive position in the global market of ferroalloys. Most likely, this could cause the plant's shutdown," the association said in a statement, according to the publication.
The growth in expenses for JSC Zaporizhia Ferroalloy Plant, an UkrFA member, will be about UAH 3.5 million ($125,673) per month, the UkrFA CEO said.
The Association emphasizes that Ukrzaliznytsia does not compensate for the growth in tariffs by reducing them for profitable sectors, for example, transportation of ferroalloys. "In addition, we consider it extremely unfair to distribute product groups according to tariff classes so that the increase in prices does not affect certain groups of goods with a significant share in the total turnover organized via Ukrzaliznytsia," the UkrFA said.
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"We will add hidden factors – downtime and untimely supply of railcars, lack of responsibility for cargo protection by Ukrzaliznytsia, repair of cars by enterprises, and empty echelon runs – and we will get at least 40% of additional costs for the main product type," Kudryavtsev said.
Another factor in the rise of ferroalloy production cost is the new procedure for payments in the electricity market, which will come into force on January 1, 2019.
According to UkrFA, its companies will have to pay additionally over UAH 300 million ($10.8 million) for electricity in advance from December 27 to January 5.