Ukraine’s major iron ore concentrate producer, Ingulets GOK, may be forced to halt production due to issues with electricity supplies and the high cost of imported power, according to the specialized news agency GMK Center.
In a letter to the government, Ingulets GOK CEO Ihor Toniev stated that the share of electricity in the net cost of the produced concentrate was around 51%. The recent government decision that ordered industrial consumers to increase the share of imported electricity to 80% of their total consumption has raised concerns for the company.
Toniev warned that the purchase of imported electricity, which has reached up to 200 euros per megawatt hour, is becoming unaffordable for Ingulets GOK, and “further price increases pose a serious threat to industrial enterprises.”
The recent Russian missile attacks have destroyed about half of Ukraine’s power-generating capacities, resulting in widespread blackouts and forcing the country to start large-scale electricity imports from the European Union. This situation has significantly impacted the operations of Ingulets GOK, which is a part of Ukraine’s leading Metinvest metallurgical holding.
Toniev stated that the possible shutdown of the Ingulets GOK plant would lead to a decrease of 2.7 million metric tons in the output of iron ore products in Ukraine. In 2019, the company produced 12.3 million tons of iron ore concentrate, according to Metinvest data.
The high power costs and the government’s decision to increase the share of imported electricity have put Ingulets GOK in a precarious position, threatening the company’s ability to remain competitive in foreign markets. The potential shutdown of the plant would have a significant impact on Ukraine’s iron ore production and export capabilities.
Metinvest, the parent company of Ingulets GOK, has not yet responded to requests for comment on the situation.