The main reason for this decision is the disproportionate and rapid increase in electricity tariffs, which has made steel production deeply unprofitable. Longobardo emphasizes that the company has exhausted all internal resources for optimization, and without systemic solutions from the state regarding energy tariffs, continued operation is impossible.
Why Have Electricity Prices Reached Their Peak?
The sharp increase in electricity prices in Ukraine is multifaceted. The main factors are the consequences of Russian attacks that damaged thermal and hydroelectric power plants, the occupation of the Zaporizhzhia Nuclear Power Plant (ZNPP), and the loss of a significant portion of wind generation capacity. This has led to a reduction in domestic supply and a substantial increase in the cost of electricity production and delivery. Additional pressure comes from currency fluctuations, the rising cost of imported components, and the growing role of gas generation, which is significantly more expensive.
However, as Mauro Longobardo points out, even after the heating season has ended and in the absence of a capacity deficit in the energy system, electricity prices remain at an extremely high level. He points to the lack of genuine competition, which allows Energoatom, which produces over 50% of the country's electricity, to set prices that are several times higher than its cost. Furthermore, Ukrenergo restricts cross-border capacity, hindering electricity imports from Europe. As a result, for almost the entire first half of the year, prices in the Ukrainian market were the highest in Europe, and they rose even further in July, reaching nearly $150 per megawatt when factoring in the cost of transmission and distribution.
Financial Performance and Risks for the Enterprise
The rapid increase in tariffs has drastically undermined the competitiveness of energy-intensive enterprises like ArcelorMittal Kryvyi Rih. According to the company, in the first five months of 2025 alone, the enterprise's net loss reached 3.8 billion UAH. While in 2021 the share of electricity costs in the product price was only 7%, by 2025 it had grown to 20%. Even when not operating at full capacity, the plant consumes about 250 MW per hour, making it one of the most energy-intensive in the country.
The price of electricity in June was $135/MWh, whereas in EU countries it drops below $100, and in France, it is only $40. This price difference makes Ukrainian metallurgical products uncompetitive even on foreign markets, limiting export opportunities.
The Plant's Role and Prospects for Support
ArcelorMittal Kryvyi Rih currently operates at a limited capacity of 3 million tons of steel per year. About 15% of this production is exported to EU countries, 20-30% goes to the US market, and the rest is sold domestically in Ukraine. Maintaining production volumes over the past three years has been possible thanks to massive financial support from the parent company, ArcelorMittal, which has invested $1 billion in the Ukrainian plant since the beginning of the war, with $650 million in the first year alone. These funds have not only allowed for the continuation of production but also for stable wage payments to employees.
However, the financial balance is rapidly deteriorating. In April, the cost of electricity was 40–50% higher than planned, effectively "eating up" all available investment resources. According to Longobardo, the plant needs at least $150 million in annual investments to sustain its operations. He stated directly: "If the government does not act, 2025 will again be unprofitable. And we may reconsider our future in Ukraine."
The Path to Salvation and Key Proposals
The crisis situation with ArcelorMittal Kryvyi Rih poses serious risks not only for the company itself but for the country as a whole. The enterprise, along with its contractors and suppliers, accounts for up to 50% of the Kryvyi Rih budget, and at the national level, its problems could impact GDP and increase the country's dependence on steel imports during future reconstruction.
To find a way out of this situation, the company has appealed to the government with proposals. Among the key steps are the introduction of mechanisms for artificial competition in the electricity market, similar to those in France, and the organization of special auctions for energy-intensive enterprises. Additionally, the company proposes holding long-term auctions for predictable electricity imports from the EU. The main plea to the government is to develop a fair market mechanism that will lead to stable and competitive energy prices, which are vital for supporting production and the entire country.
