ArcelorMittal to close its second unit in Ukraine amid Russian attacks

Ukraine's major steelmaker ArcelorMittal Kryvyi Rih is closing another of its divisions in Ukraine due to a deepening energy crisis caused by Russia's ongoing attacks on the Ukrainian energy system, the company said on Friday.

 

Russia has sharply increased the number and intensity of strikes on Ukraine's energy sector, targeting both power plants and substations, forcing Kyiv to cut power supplies to businesses and increase imports from the EU.

 

The company, a subsidiary of ArcelorMittal SA, said in a statement that it would close its subsidiary Casting and Mechanical Plant, one of the country's largest enterprises, which includes foundry, press-forging, thermal, weld deposition equipment and machining.

 

The decision to shut down the plant comes into  effect three months from the date of announcement.

 

"The key reason for this step is the energy crisis that our company faces during wartime, in particular the extremely high cost of electricity in Ukraine," ArcelorMittal Kryvyi Rih said.

 

"This led to the significant increase of the cost of production, which further worsened the economic feasibility of manufacturing steel products," it added.

 

The company also said that another reason was the decision of the European Commission to introduce the CBAM (Carbon Border Adjustment Mechanism) from January without any exceptions or transition period for Ukrainian producers.

 

The CBAM is the EU's tool to put a fair price on carbon emitted during the production of carbon-intensive goods entering the bloc.

 

The plant will be the second of the company's assets to be closed this year.

 

ArcelorMittal Kryvyi Rih said in January it would close one of its production units in the second quarter because of the EU environmental policy and high local power prices.

 

The decision to shut down the two units will affect more than 2,400 jobs, it said.